KRA collects Sh1.1 billion in digital asset taxes in 21 months

By Newsflash Writer

The Kenya Revenue Authority (KRA) collected Sh1.1 billion from digital asset taxes between September 2023 and June 2025, according to newly released data.

The collections, recorded between September 1, 2023 and June 30, 2025, indicate that transactions worth approximately Sh36.1 billion were processed during the 21-month period, based on the 3 percent tax rate applicable at the time.

The Income Tax Act defines digital assets as non-physical items of value, including cryptocurrencies and non-fungible tokens (NFTs)—unique digital tokens representing ownership of collectibles or real-world assets such as artwork.

The 3 percent Digital Asset Tax was introduced through the Finance Act 2023 and took effect on September 1, 2023. However, the Finance Act 2025, which became law on July 1, 2025, slashed the tax rate to 1.5 percent.

Section 12F of the now-repealed Income Tax Act stated: “A tax to be known as the Digital Asset Tax shall be payable by a person on income derived from the transfer or exchange of digital assets. The owner of a platform or the person who facilitates the exchange or transfer of a digital asset shall deduct the Digital Asset Tax and remit it to the Commissioner.” This provision was part of the government’s strategy to tap into the rapidly expanding digital asset sector.

Kenya has seen rising interest in digital currencies, with the number of cryptocurrency users projected to reach 733,300 by 2025, up from just 10,400 in 2017, according to market data from Germany-based firm Statista.

Excise Duty replaces Digital Asset Tax amid regulatory shift

KRA data further shows that between 2021 and 2022, Kenya’s cryptocurrency sector processed transactions valued at about Sh2.4 trillion—nearly 20 percent of the country’s gross domestic product over the same period.

Initially, the Finance Bill 2025 proposed reducing the Digital Asset Tax from 3 percent to 1.5 percent.

However, an amendment introduced in Parliament called for the complete elimination of the tax, citing flawed structural design. In its place, the Finance Act 2025 introduced a 10 percent Excise Duty on fees charged for digital asset transactions, effective July 1, 2025. The second schedule of the Excise Duty Act was updated to include a new clause specifying a 10 percent duty on service fees from virtual asset trades.

“When you make a transfer of digital assets, the law currently says you must pay tax on the transaction amount. It’s like being taxed when you deposit money in a bank. We are changing this to focus on the service fee charged by the platform,” said National Assembly Finance and Planning Chairperson Kuria Kimani while moving the amendment on June 18.

As of the end of 2024, an estimated 10 million Kenyans held some form of digital asset, with cryptocurrency trading making up a significant portion of the activity. Following the repeal of the Digital Asset Tax and the introduction of Excise Duty, the government has also moved to tighten oversight with the introduction of the Virtual Asset Service Providers Bill, 2025.

This proposed legislation is part of Kenya’s broader plan to strengthen anti-money laundering frameworks. It is one of the key steps required to help the country exit the Financial Action Task Force’s (FATF) grey list. The bill mandates regulatory oversight of digital asset providers amid rapid adoption and rising transaction volumes in the local cryptocurrency space.