Crypto Taxation in Kenya

Kenya has moved through two distinct crypto-tax regimes in under three years. The Finance Act 2023 introduced the Digital Asset Tax (DAT) at 3% of gross transaction value, effective 1 September 2023. The Finance Act 2025 repealed the DAT entirely, replacing it with a narrower 10% excise duty on exchange and wallet service fees effective 1 July 2025. Separately, the Virtual Asset Service Providers Act 2025 established the first dedicated licensing framework for crypto businesses in Kenya, and the Finance Bill 2026 -- still in legislative process as of mid-2026 -- proposes mandatory annual information returns from exchanges to the Kenya Revenue Authority (KRA). Residents holding or trading digital assets must also consider Capital Gains Tax and income tax obligations that exist independently of the DAT regime. For Kenya country-level background, see the Kenya country overview.

What Was the Digital Asset Tax, and Why Was It Repealed?

The Finance Act 2023 inserted Section 12F into the Income Tax Act, imposing a 3% DAT on the fair market value of every digital asset transfer or exchange -- whether or not the holder realised a profit. KRA collected over KES 1.1 billion under this regime between September 2023 and June 2025. Industry groups argued the gross-value basis was punitive: a trader exchanging KES 100,000 of Bitcoin for Ether owed KES 3,000 in DAT regardless of whether the trade was profitable. Following sustained lobbying from crypto stakeholders, Parliament amended Section 12F in the Finance Act 2025 to delete the DAT and replace it with the excise duty framework described below.

What Is the Current 10% Excise Duty and Who Pays It?

Effective 1 July 2025, the Finance Act 2025 amended the Excise Duty Act to impose a 10% excise duty on fees charged by Virtual Asset Service Providers (VASPs) on virtual asset transactions, under Section 46(b)(v) of the Excise Duty Act. The duty is calculated on the fee or commission charged by the platform -- not on the underlying asset value. A platform charging a KES 1,000 transaction fee must collect an additional KES 100 in excise duty and remit it to KRA by the 20th of the following month. The practical shift is significant: the tax burden moved from end-users paying on every transaction value to platforms collecting on their own service charges. Both resident and non-resident providers serving Kenyan users fall within scope, including peer-to-peer platforms that charge facilitation fees. Deloitte has noted that the Excise Duty Act does not yet define "virtual assets" or "Virtual Asset Service Provider," creating definitional uncertainty that KRA guidance will need to resolve.

Does Income Tax or Capital Gains Tax Still Apply to Crypto Gains?

Yes. The repeal of the DAT did not eliminate other tax heads that apply to digital assets.

• Capital Gains Tax (CGT): Kenya's CGT applies at 15% on the net gain from the transfer of property situated in Kenya. The rate was raised from 5% to 15% on 1 January 2023. Crypto assets are treated as property; when a holder disposes of digital assets at a profit -- by selling for Kenya Shillings (KES), swapping for another token, or spending -- the net gain is subject to 15% CGT. Losses on disposals may offset future gains from the same category but cannot be set against other income heads. Payment is made through KRA's iTax system under the Income Tax -- Capital Gains Tax module.
• Income Tax: Crypto received as income -- through mining rewards, staking yields, airdrops, or payment for services -- is treated as ordinary income under the Income Tax Act (Cap 470). Individuals are taxed at progressive PAYE rates of 10% to 35%; companies pay a flat 30%. Income must be declared in KES using the prevailing exchange rate on the date of receipt.

Holders who simply buy and hold digital assets without disposing of them do not trigger CGT or income tax during the holding period.

What Does the Virtual Asset Service Providers Act 2025 Require?

The Virtual Asset Service Providers Act 2025 was assented to by the President and came into force on 21 October 2025 (gazetted for commencement 4 November 2025). It is Kenya's first dedicated regulatory statute for crypto businesses. Two authorities share oversight: the Central Bank of Kenya (CBK) supervises custodial wallet providers, payment processors, and stablecoin issuers; the Capital Markets Authority (CMA) licenses exchanges, brokers, investment advisors, fund managers, and tokenisation platforms. Only companies incorporated or registered in Kenya may hold a VASP licence -- sole traders and natural persons are excluded. Existing VASPs have until November 2026 to obtain a licence. The Act mandates AML/CFT compliance aligned with the Proceeds of Crime and Anti-Money Laundering Act (POCAMLA), consumer protection obligations, and annual compliance audits. Implementation regulations specifying licence categories, prescribed forms, and fees were still being developed by the Cabinet Secretary for National Treasury as of mid-2026.

What Does the Proposed Finance Bill 2026 Add?

The Finance Bill 2026 was still in the legislative process as of June 2026 and had not been enacted into law. The following describes proposals only.

The Bill proposes to insert Section 6C into the Tax Procedures Act, requiring every VASP facilitating exchange transactions, operating trading platforms, or acting as intermediary to file annual information returns with KRA. Returns must name "reportable users," disclose transaction histories, wallet activities, and other prescribed data. VASPs with no reportable users in a given year must file nil returns. Penalties for false statements reach KES 100,000 per infringement or up to three years imprisonment; failure to file carries a KES 1 million penalty. A companion provision (Section 6D) would authorise Kenya to enter international agreements for automatic exchange of virtual asset data, aligning with the OECD Crypto-Asset Reporting Framework (CARF). Separately, Finance Bill 2026 proposals include a one-time VASP licensing fee of KES 150 million.

Kenya Crypto Tax at a Glance (Current Position as of July 2025)

For accurate compliance tailored to your specific transaction history, income sources, and residency status, consult a qualified tax professional registered with the Institute of Certified Public Accountants of Kenya (ICPAK) or a firm with documented experience in digital asset taxation.