PwC supports crypto advocacy against Kenya's digital asset tax proposition
In a significant shift for the digital asset taxation landscape in Kenya, the Kenyan government has proposed changes to the current tax regime, following intense lobbying by local cryptocurrency companies and other industry players.
The Virtual Assets Chamber of Commerce (VACC), backed by Binance, recently hosted a crypto training for the Finance Committee, as lawmakers review the VASP Bill 2025, which subjects crypto firms to the oversight of the Central Bank and the Capital Markets Authority. During the training, lawmakers conducted real-time crypto transactions and studied blockchain infrastructure.
A coalition of Kenya's top cryptocurrency companies, including Busha, Kotani Pay, Luno, Swypt, HoneyCoin, and DurraFx, has submitted a proposal to Parliament for significant changes in the taxation of digital assets. The coalition, which is advised by PwC Kenya, has put forward three key proposals:
1. Repeal Section 12F of the Income Tax Act, which imposes a flat 1.5% tax on digital asset transfers. 2. Classify digital assets as property, taxed under standard capital gains rules. 3. Recognize VASPs as financial institutions for VAT and excise purposes to avoid double taxation and cascading fees.
The goal of these proposals is to scrap the current tax regime and replace it with a fairer, more globally aligned tax framework.
The Finance Bill 2025 proposes halving the Digital Asset Tax (DAT) from 3% to 1.5%, but this change is still pending parliamentary approval. However, the bill's introduction reflects ongoing adjustments and debates on how to tax the digital asset sector fairly.
The DAT was introduced as part of Kenya's effort to boost tax revenue, but stakeholders argue that the approach is shortsighted. Crypto firms argue that the current law treats digital assets more harshly than other property types, discouraging innovation and investment.
Chebet Kipingor of Busha stated that smart regulation can drive crypto adoption and Kenya can lead Africa's blockchain future with the right tax framework. Parliament will deliberate on the Finance Bill 2025 in the coming weeks, with industry players saying this is the final window to influence the outcome.
The current status of digital asset taxation in Kenya, particularly the Digital Asset Tax (DAT), has recently changed significantly. Initially, Kenya introduced a 3% DAT on the gross value of cryptocurrency transactions in September 2023, which was controversial and broadly opposed by the crypto industry stakeholders. However, following active lobbying by Kenyan cryptocurrency companies and other ecosystem players, the Kenyan National Assembly passed the 2025 Finance Act that repealed the 3% DAT, removing this tax pending the president's assent as of June 2025. Instead of the DAT, the new law introduces a 10% excise duty on transaction fees collected by crypto exchanges from users, which is a different tax structure targeting the fee income of exchanges rather than the gross transaction value. This excise duty came into effect on July 1, 2025.
In summary:
| Tax Type | Status as of mid-2025 | Notes | |--------------------------------|------------------------------------------|--------------------------------------------------------| | 3% Digital Asset Tax (DAT) | Repealed (pending presidential assent) | Tax on gross crypto transaction value; removed after lobbying[1] | | Digital Asset Tax (proposed 1.5%)| Briefly proposed, then repealed | Halving of DAT considered but ultimately replaced[2][3][4] | | 10% Excise Duty on Exchange Fees| Introduced and effective July 1, 2025 | Tax applies to transaction fees collected by crypto exchanges[1][4] |
Thus, Kenya has moved away from taxing every crypto transaction at a flat rate and now opts for taxing the fee income of service providers in the crypto ecosystem. This shift follows strong industry pushback and aims to balance generating government revenue with fostering growth and innovation in the digital asset space.
- The Kenyan government has put the Digital Asset Tax (DAT) of 3% under review, following intense lobbying by local cryptocurrency companies and other industry players.
- The Virtual Assets Chamber of Commerce (VACC), with the support of Binance, recently provided a crypto training to the Finance Committee while they review the VASP Bill 2025.
- A coalition of Kenyan cryptocurrency companies has submitted a proposal to Parliament seeking significant changes in the taxation of digital assets, with a focus on repealing the current flat 1.5% tax on digital asset transfers.
- The coalition, advised by PwC Kenya, has proposed that digital assets be classified as property and subject to standard capital gains rules, aiming to replace the current tax regime with a fairer, globally aligned tax framework.
- The Finance Bill 2025 proposes to halve the DAT from 3% to 1.5%, but this change is still pending parliamentary approval.
- Stakeholders, such as crypto firms, argue that the current law treats digital assets more harshly than other property types, discouraging innovation and investment in the technology sector.
- Chebet Kipingor of Busha stated that smart regulation can drive crypto adoption and Kenya can lead Africa's blockchain future with the right tax framework.
- In June 2025, the Kenyan National Assembly passed the 2025 Finance Act, which repealed the 3% DAT. Instead, a 10% excise duty on transaction fees collected by crypto exchanges from users has been introduced, effective July 1, 2025.
