A newly introduced bill in the Kenyan parliament, The Finance Bill 2023, has sparked mixed reactions online. It proposes a 3% tax on cryptocurrency and non-fungible token (NFT) transfers and a 15% tax on monetized online content. The bill, presented on May 4th, aims to regulate digital assets by taxing income derived from transferring or exchanging digital assets, explicitly mentioning NFTs in its provisions.
The Finance Bill 2023: The Legislative Process and Proposed Regulations
Before becoming law, the bill must pass through five rounds of readings, committees, and reports by the National Assembly. If successful, it will be sent to the president for final approval.
Under the proposed regulations, crypto exchanges or individuals initiating cryptocurrency or NFT transfers would be responsible for collecting and remitting the 3% tax to the government. This would require exchanges not registered in Kenya to register under the new tax regime.
Follow CryptoMode on Twitter, Youtube and TikTok for news updates! The bill also targets “digital content monetization” by imposing a 15% tax on online content creators who receive payment for promoting and advertising products and services. That includes, but is not limited to, sponsorships, affiliate marketing, merchandise sales, and paid subscriptions.
Mixed Reactions to Digital Asset Taxation
The digital assets section of The Finance Bill 2023 has elicited varied responses online. Some individuals express optimism, as the proposed tax officially recognizes cryptocurrencies and NFTs in the country. Previously, the Central Bank of Kenya had issued warnings against using cryptocurrencies but stopped short of implementing outright prohibitions.
However, critics argue that the proposed 3% tax is excessive. Rufas Kamau, a Kenyan research and markets analyst, commented on Twitter that the tax was “a joke” and questioned if it would apply to “supermarket and credit card loyalty points.”
Cryptocurrency Kenya, a Kenyan crypto advocacy group, contends that the digital tax “must apply to everything digital,” and calls the cryptocurrency-specific tax “targeted harassment.” The group also highlights that the proposed 3% tax is significantly higher than fees charged by exchanges, such as Binance’s 0.10% trading fee.
Previous Attempts at Crypto Regulation in Kenya
Kenya first attempted to regulate cryptocurrencies in November by amending its capital market laws. These amendments mandate individuals owning or dealing in cryptocurrencies to report information on their activities to the authorities.
As the Kenyan government moves forward with The Finance Bill 2023, it remains to be seen how these proposed regulations will impact the burgeoning digital asset market within the country.
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