Kenya drops controversial 3% digital asset tax after industry pushback

Kenya has officially withdrawn a proposed 3% digital asset tax following strong opposition from industry players and stakeholders. The tax, first introduced two years ago, faced growing resistance, particularly over the past year, led by the Virtual Assets Chamber of Commerce (VACC). In response to coordinated lobbying efforts, the Kenyan parliament’s finance committee removed the provision from the 2025 finance bill, which was signed into law by President William Ruto in June. The repeal of section 12F under the Income Tax Act marks a significant victory for Kenya’s vibrant digital asset community.

Instead of the controversial tax, lawmakers have opted to impose a 10% excise duty on transaction fees charged by exchanges and wallets. Committee chairman MP Kuria Kimani credited the tax amendment to the proactive efforts of local virtual asset service providers (VASPs), who partnered with PwC to present their case. In May, a coalition including Busha, Swypt, Kotani Pay, and Luno urged legislators to classify digital assets as property and regulate VASPs as financial institutions. They emphasized the need for regulations based on services provided rather than the underlying technology.

Kenya’s decision to reverse course reflects broader regulatory uncertainty surrounding cryptocurrency. The country continues to grapple with how best to regulate the sector, even as it remains one of Africa’s most active crypto markets.