The National Treasury has proposed halving the tax on digital assets from 3% to 1.5% in the Finance Bill 2025, a move aimed at aligning the levy with the turnover tax charged on small businesses and promoting tax compliance among crypto traders.
Digital assets defined under Kenyan law as intangible items of value such as cryptocurrencies, non-fungible tokens (NFTs), and tokenized content have increasingly drawn the government’s attention as a growing frontier for taxation and regulation.
Treasury Cabinet Secretary John Mbadi, while speaking on Citizen TV’s The Explainer, said the 3% digital asset tax introduced in 2023 will now be slashed to 1.5%, matching the reduced turnover tax for businesses earning between Ksh.1 million and Ksh.25 million annually. “The argument from players in the digital space has been that they are largely small businesspeople, hence the need for uniformity,” said Mbadi.
The revised rate reflects a shift in strategy by the government to encourage compliance in a sector that has seen rapid growth but limited oversight. Mbadi emphasized that lower consumption taxes typically lead to improved revenue collection through increased voluntary compliance.
Kenya is estimated to have around four million crypto users, according to the United Nations Conference on Trade and Development (UNCTAD), though adoption remains lower than mobile money platforms. Despite this, the government sees significant economic potential in the sector and has stepped up efforts to regulate it.
New proposals now require cryptocurrency firms to establish physical offices in Kenya and appoint directors approved by a body such as the Capital Markets Authority. The Kenya Revenue Authority (KRA) has also announced plans to implement a real-time monitoring system for crypto transactions to minimize tax evasion.
Kenya’s move mirrors trends across Africa. Nigeria is revising its tax laws to accommodate digital assets, while South Africa has already granted legal status to crypto and licenses over 240 virtual asset service providers.
With the halving of the digital asset tax, Kenya aims to strike a balance between taxation and innovation, promoting responsible growth in the country’s evolving digital economy.
