Kenya’s cryptocurrency companies, officially registered as virtual asset service providers (VASPs), are rallying together to oppose the country’s proposed Digital Asset Tax (DAT). According to industry sources, the coalition plans to hire a global tax advisory firm to bolster its lobbying efforts against what it describes as a potentially devastating tax measure.
Quick Recap: How We Got Here
In 2023, Kenyan authorities introduced the Digital Asset Tax (DAT) as part of the amended Finance Act. Set to take effect in September 2023, the DAT mandates a 3% deduction on the value of all digital asset transactions, regardless of whether the transaction results in a profit, a loss, or is simply a transfer between wallets or exchanges.
The move sparked significant backlash from Kenya’s burgeoning crypto community, which warned that the blanket tax would stifle innovation, discourage investment, and ultimately cripple Kenya’s ambitions to become a leading African crypto hub.
The Latest: Crypto Coalition Ramps Up Lobbying
According to a release obtained by Mariblock, Kenyan VASPs believe the digital asset tax poses an existential threat to their businesses if left unchallenged.
To strengthen their advocacy, the coalition is now enlisting the services of a leading global tax advisory firm. The move is aimed at adding legislative and financial weight to their demands for the government to reconsider or amend the DAT provisions before they become entrenched in law.
In addition, the coalition has launched a nationwide fundraising campaign, targeting crypto businesses across Kenya to fund its lobbying activities. Encouragingly, the group has already secured a significant portion of its fundraising goal.
However, time is of the essence. The coalition has emphasized the urgency of beginning its lobbying efforts before the upcoming tax submission deadline, warning that failure to act now would likely close their window of influence ahead of the passage of the 2025 Finance Bill.
Key Quote
In a statement signed by representatives of the coalition, they stressed:
“The Finance Bill 2025 represents our final battleground before catastrophic taxation policies permanently damage Kenya’s digital asset ecosystem. This isn’t merely another regulatory challenge—the proposed 3% Digital Asset Tax threatens the very existence of our businesses and Kenya’s position as an African crypto hub.
Time is rapidly running out. Beyond this critical window, our ability to influence this process will not only become exponentially more difficult but potentially impossible.”
Background: A Rocky Road to Regulation
Kenya’s path to implementing the DAT has been anything but smooth.
In June 2023, the government’s initial announcement of the amended Finance Act triggered widespread protests, leading President William Ruto to temporarily withdraw the bill. However, the bill was later revived with a new implementation date of September 1, 2023.
Just before the new deadline, the Blockchain Association of Kenya (BAK) filed a lawsuit challenging the DAT, arguing that it would severely hinder blockchain innovation and investment in the country.
Although a Kenyan appellate court initially ruled parts of the Finance Act unconstitutional, the Supreme Court of Kenya later overturned the decision, upholding the act’s constitutionality. This ruling paved the way for the government to proceed with implementing the digital asset tax provisions, which had been on hold since mid-2023.
IMF Pressures Loom Large
Kenya’s push to implement the Digital Asset Tax and other aggressive tax measures may also be influenced by pressure from the International Monetary Fund (IMF).
The IMF had previously required Kenya to increase tax revenues as a condition for unlocking future funding tranches. However, Kenya struggled to meet these conditions, failing to fully enforce the new tax measures outlined in the amended Finance Act.
As a result, Kenya missed an important IMF review and failed to secure an expected $850 million disbursement. The country later canceled its previous IMF deal and is currently negotiating a new funding arrangement.
The growing urgency to shore up tax revenues may explain the government’s insistence on rapidly implementing the DAT, despite domestic resistance.
What’s Next?
With the tax submission deadline fast approaching and the 2025 Finance Bill under deliberation, the coming weeks will be pivotal for Kenya’s crypto ecosystem.
If the coalition of VASPs succeeds in delaying or amending the digital asset tax, it could preserve Kenya’s status as one of Africa’s most vibrant crypto hubs. However, failure to influence the upcoming legislation could usher in a new era of heavy taxation and regulatory uncertainty for the country’s digital asset businesses.
TawkCrypto will continue to monitor developments closely
