Kenya’s top crypto firms, backed by PwC, push for reform of the controversial crypto tax regime, warning it could stifle innovation and drive investment out of the country.
Kenya’s embattled digital asset tax (DAT) is under renewed fire as a coalition of cryptocurrency companies formally submitted a proposal to Parliament on May 29, demanding sweeping changes to how the country treats crypto for tax purposes.
The industry-led lobbying effort, now bolstered by PwC Kenya’s support and legal advisory, is calling on the National Assembly’s Finance Committee to repeal the flat-rate tax and adopt a more globally aligned framework. The move follows months of growing backlash and culminates in a critical moment as Parliament prepares to deliberate the Finance Bill 2025.
From 3% to 1.5% — But Still Not Enough
Initially introduced as a 3% levy on all digital asset transfers, the DAT has drawn widespread criticism for taxing transactions regardless of whether a profit is made. In response to pressure from industry players, the Finance Bill 2025 proposes a reduction to 1.5%, though crypto stakeholders say that’s still fundamentally flawed.
“Technology dies or thrives on the altar of law and policy,” said Keega Gakuua, Head of Legal at Swypt. “Fundamentally, as an industry, we would prefer to be regulated in terms of the offered service and not the underlying technology.”
The Coalition’s Three Key Demands
The crypto industry’s formal submission to Parliament, supported by players such as Busha, Kotani Pay, Luno, Swypt, HoneyCoin, and DurraFx, lays out three major recommendations:
- Repeal Section 12F of the Income Tax Act — scrap the DAT entirely to prevent unfair taxation on digital asset transfers, especially when no profit is realized.
- Tax digital assets under capital gains rules — treat crypto like other properties such as stocks or land, subject to tax only when actual gains are made.
- Recognize VASPs (Virtual Asset Service Providers) as financial institutions — to simplify VAT and excise treatment, reduce double taxation, and align with how traditional finance is handled.
Why It Matters
The crypto ecosystem in Kenya, one of Africa’s most vibrant, has long operated in a regulatory gray zone. While adoption continues to grow, stakeholders argue that burdensome taxes like DAT undermine both innovation and financial inclusion.
“As Nigeria’s first licensed exchange, we’ve seen how smart regulation drives crypto adoption,” said Chebet Kipingor of Busha. “Kenya can lead Africa’s blockchain future with the right tax framework.”
Timeline of Crypto Lobbying in Kenya
Kenya’s digital asset regulation journey has seen a whirlwind of developments:
- BAK sues over the DAT
- Tax backlash intensifies across social and legal fronts
- MPs propose a new crypto law
- Courts uphold the original 3% tax
- Draft rules issued for VASPs
- VACC makes formal submissions
- VASP Bill enters Parliament
- Finance Committee attends crypto training
- PwC-backed proposal submitted
- DAT cut proposed: 3% → 1.5%
Earlier this month, Binance-backed Virtual Assets Chamber of Commerce (VACC) hosted a blockchain training for the Finance Committee, where lawmakers engaged in live crypto transactions to better understand the technology they’re seeking to regulate.
Zooming Out
Kenya’s DAT was introduced in part to meet IMF loan conditions tied to increased tax revenue generation. However, many argue that the short-term fiscal gains risk long-term economic potential in a region poised to become a blockchain innovation hub.
As Parliament prepares to deliberate the Finance Bill 2025, crypto firms say this is the last chance to steer the country toward smarter, innovation-friendly regulation.
