Kenya's president approved a monetary law on June 26 that would raise taxes and impose a 3% tax on digital assets.
The ruling party said the strategy should boost state coffers by reducing dependence on costly foreign loans from China, the International Monetary Fund (IMF) and the World Bank. This taxation was launched on July 1 and includes a 1.5% housing tax, a doubling of the fuel tax to 16%, a 5% tax for digital content producers and a 3% tax on virtual assets related to the transfer or trading of crypto-assets.
The Kenyan government has ruled that platform owners must pay the fee. Offshore operators were given 24 hours to remit the amount due to the Kenya Revenue Authority. The levy has caused much concern among local crypto-traders, who tend to make only small profits. It is believed that the authorities should inform cryptocurrency owners about this tax and how it can be paid, rather than simply imposing it without explanation.
The Blockchain Association of Kenya (BAK) said the new law is too vague. Bak believes that tax authorities should take a different approach when dealing with non-exchangeable tokens, share tokens, stablecoins and utility tokens.
BAK argued that taxes on digital assets should take into account different uses of the assets, rather than a single 'one-size-fits-all' policy, as this could discourage innovation.
The Kenyan Blockchain Association said the new levy does not take into account unprofitable transactions or zero-profit transfers, where users can quickly switch crypto-assets between their accounts. The high volatility of digital resources implies that not all transactions are profitable.
Neglecting this detail could lead to unfair taxation of traders and significantly slow down the progress of the sector in the country.
In April, a bill was tabled in Kenya's Parliament that would require digital currencies to be controlled as securities.
