Kenya’s crypto coalition challenges the 1.5% digital asset tax, calling it unfair and harmful to innovation and investment.
Kenya’s leading cryptocurrency firms, backed by PwC Kenya, have submitted a formal proposal to Parliament seeking to scrap the newly revised 1.5% Digital Asset Tax (DAT), arguing that it is unjust, innovation-stifling, and inconsistent with international norms. The coalition—comprising companies like Busha, Luno, Kotani Pay, Swypt, HoneyCoin, and DurraFx—presented their case to the National Assembly’s Finance Committee on May 29, calling for a shift from the flat tax to a more globally aligned framework.
The proposal urges lawmakers to repeal Section 12F of the Income Tax Act, which imposes a 1.5% tax on all digital asset transfers regardless of gain. Instead, they suggest classifying digital assets as property taxed under capital gains rules and recognizing virtual asset service providers (VASPs) as financial institutions to avoid double taxation and cascading VAT charges.
Although the Finance Bill 2025 already proposes cutting the DAT from 3% to 1.5%, the crypto industry argues that any form of turnover-based taxation remains disproportionate and detrimental to growth. Keega Gakuua of Swypt emphasized that regulation should be service-based, not tech-based, warning that poor policy choices could kill innovation.
This lobbying effort marks a culmination of years of industry engagement with lawmakers, including a recent training session where MPs explored blockchain systems firsthand. The VASP Bill 2025, which would place crypto under the oversight of the Central Bank and Capital Markets Authority, is also under review.
The DAT’s introduction was partly influenced by Kenya’s need to raise revenue to meet IMF conditions, but stakeholders say the approach is short-sighted. Citing Nigeria’s progress, Busha’s Chebet Kipingor stressed that smart regulation—not punitive tax—drives adoption and investment. With Parliament set to debate the Finance Bill 2025 soon, crypto firms say this is the final opportunity to steer the country toward a balanced digital asset policy.
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