The National Treasury is set to halve the digital asset tax from 3 percent to 1.5 percent in the 2025 Finance Bill, a move designed to ease the burden on cryptocurrency traders and digital entrepreneurs. This adjustment, which targets individuals trading in cryptocurrencies, non-fungible tokens (NFTs), and other digital assets like data, images, videos, and written content, aims to stimulate growth in the country’s expanding digital economy.
Treasury Cabinet Secretary John Mbadi announced the proposed tax cut during an interview on Citizen TV’s The Explainer on Tuesday. The new rate will align with the existing 1.5 percent turnover tax, which applies to small businesses earning between Ksh1 million and Ksh25 million annually.
Mbadi explained that the change was necessary to bring uniformity between digital asset traders and small business owners.
“Digital asset tax will be reduced from 3% to 1.5 percent in the new budget. That is because we have turnover tax for small businesspeople, which was reduced to 1.5 percent,” Mbadi said.
The government introduced the digital asset tax in 2023 to broaden its tax base and capitalize on the rapid growth of the digital sector.
Mbadi acknowledged that cryptocurrency traders had been calling for a lower levy, arguing that many are small business owners. He emphasized that the reduction was also aimed at improving tax compliance across the sector.
“Lower rates on consumption taxes increase revenue, which ultimately boosts overall revenue collection,” Mbadi added.
In recent months, Kenya has introduced measures to regulate the cryptocurrency sector further. New proposals require cryptocurrency firms operating in the country to set up local offices and appoint directors, subject to approval by regulatory bodies such as the Capital Markets Authority (CMA).
Additionally, the Kenya Revenue Authority (KRA) has announced plans to implement real-time crypto transaction monitoring to improve oversight and catch tax evaders and criminals within Kenya’s growing digital market.
