Although digital assets are a global creation, they are subject to different rules in different jurisdictions. As a result of the unfolding crisis in Kenya, the government is planning to introduce a tax of 3% on the value of the transfer or exchange of digital assets. Influencers are also set to suffer.
Kenya forced to introduce new taxes within cryptocurrencies
The East African country of Kenya is planning to introduce new tributes on digital assets and earnings from virtual activities. According to proposals in the Finance Bill, a 3% tax will be levied on the value of the transfer or exchange of digital assets, while content creators will pay 15% on their online earnings.
If these proposals are ratified, the taxes will be introduced in the upcoming fiscal year, starting as early as July 1. Cryptocurrency exchanges and those facilitating the exchange or transfer of digital assets will be required to retain tax deductions and remit them to the national tax authority within 24 hours.
Kenya defines digital assets as “anything that has value that is not tangible.” In this regard, cryptocurrencies, token codes, numbers held in digital form, NFT tokens and tokens of a similar nature have been introduced into the definition. Each of these assets provides a digital representation of value exchanged with or without consideration that can be transferred, stored or exchanged electronically.
Kenya an African leader in crypto adoption
The Kenyan government does not recognize cryptocurrencies as legal tender, however, in recent months it has decided to soften its stance. Thus, the country is working on a legal framework for digital assets. Regulation is not surprising here, as it turns out that Kenya, according to a 2021 Chainalysis report, leads Africa in Bitcoin adoption. It is constantly being challenged for the lead in the stakes by Nigeria, which, as is widely known, is facing huge economic problems, further fueled by the government’s strenuous introduction of CBDC solutions.
Are you a crypto-influencer? You too will be affected by the new burden!
The new proposed law, with its scope, will also cover the activities of influencers, of which, as we know, there are quite a few in the crypto world. The tax being introduced would apply to income received from sponsored content, promotions, as well as profits from affiliate marketing. Membership programs with exclusive content are also to be targeted by the government.
The actions of Kenyan lawmakers thus show that although the global economic crisis is contributing to the increase in Bitcoin adoption, there are emerging countries that are also looking to profit a bit from this trend.