Bitcoin and Cryptocurrencies Taxation in Kenya
How Is Bitcoin And Other Cryptocurrencies Taxed In Kenya? (2026 Update)
Kenya has long been a pioneer in digital innovation and mobile money adoption. In recent years, it has also emerged as one of Africa’s most active hubs for cryptocurrency trading and investment. According to Chainalysis, Kenya ranks among the top five countries globally in peer-to-peer (P2P) crypto transaction volume. This is a testament to the growing appetite for digital assets across the country.
Yet, until recently, Kenya’s tax treatment of cryptocurrencies was widely seen as unclear, and often discouraging. The controversial 3% Digital Asset Tax, introduced in 2023, applied to the full value of every transaction, regardless of profit or loss. Critics argued it stifled innovation and placed undue burden on traders.
But in July 2025, Kenya made a bold move toward becoming the crypto capital of Africa: it repealed the 3% tax and replaced it with a more balanced, investor-friendly framework.
In this guide, I’ll break down how Bitcoin and other digital assets are now taxed in Kenya, what’s changed for the moon boys, sorry - lambo boys (we all know you’re saving for that upgrade), and exchanges, and what you need to know to stay compliant, without killing your bag.
The Old Regime: 3% Digital Asset Tax (2023 - June 2025)
Under the previous system, a flat 3% tax was imposed on the gross transaction value of any cryptocurrency transfer. It applied whether you were buying, selling, or sending crypto.
This meant that even if you sold Bitcoin at a loss - or simply transferred funds between your own wallets - you still owed tax on the full amount.
This often resulted in disproportionately high costs for Kenyan crypto traders.
Example:
If a trader sold Bitcoin worth KSh 1 million, they were required to pay KSh 30,000 (3% of KSh 1 million) as tax to the Kenya Revenue Authority (KRA), in addition to any platform fees.
This approach created several problems:
Disproportionate cost: Small gains could be wiped out by taxes.
No loss relief: Losses weren’t deductible.
Discouraged trading: High friction deterred both retail and institutional investors.
2025 Reform: Introduction of 10% Excise Duty on Fees
Effective July 1, 2025, Kenya repealed the 3% Digital Asset Tax and introduced a 10% excise duty on fees charged by crypto exchanges, wallets, and related service providers. These entities are now formally referred to as Virtual Asset Service Providers (VASPs). This shift represents a substantial policy change aimed at fostering a more enabling and innovative digital asset environment.
How does it work?
Instead of taxing the entire value of a transaction, the new excise duty applies only to the service fees charged by platforms.
Example:
Trade amount: KSh 1 million
Exchange fee on Binance: 0.10% (KSh 1,000)
Excise duty tax: 10% of KSh 1,000 = KSh 100
Total cost to the trader: KSh 1,100
Comparative Illustration: Before And After
| Scenario | Exchange Fee | Tax to KRA | Total Cost to Trader |
|---|---|---|---|
| Old 3% | Ksh 1,000 | Ksh 30,000 | Ksh 31,000 |
| New 10% | Ksh 1,000 | Ksh 100 | Ksh 1,100 |
Challenges for Decentralized Exchanges (DEXs)
Unlike centralized exchanges (CEXs), DEXs like Uniswap or Raydium face unique compliance challenges because they operate on immutable smart contracts that cannot be modified to track or tax Kenyan users.
Most DEXs do not perform Know Your Customer (KYC) checks, making it nearly impossible to identify Kenyan traders. This makes it practically impossible for them to collect and remit the 10% excise duty, exposing them to potential non-compliance risks despite their decentralized, borderless design.
Other Taxes That May Apply to Crypto Activities
Crypto taxation in Kenya is not limited to excise duty alone. Other taxes may apply depending on the nature of activities:
Income Tax: Rewards from mining, staking, or airdrops are considered business income and not investment income.
They are taxed at individual rates (10–35% progressively). For companies, a flat rate of 30% applies. It is the duty of the trader or the company to self-assess and report accurately to KRA.
Excise Tax Collection Responsibility
Under the new framework, the responsibility for collecting and remitting excise duty lies with crypto exchanges and service providers. Specifically, these entities must:
Register with KRA as tax collectors.
Charge the 10% excise duty on fees to Kenyan users.
Remit the collected tax to KRA by the 20th of the following month.
Exchanges are are now required to establish local bank accounts to facilitate timely tax payments or to appoint local tax representatives to handle tax compliance and remittance.
How crypto Tax is Paid to KRA
Platform owners facilitating cryptocurrency transactions must register with the Kenya Revenue Authority to obtain a Tax PIN. This allows them to file returns and provide data on collected taxes.
Taxes must then be remitted to KRA by the 20th of the following month. In practice, many platforms convert collected taxes into stablecoins such as USDT or USDC before converting to Kenyan shillings based on prevailing exchange rates.
Risks of Non-Compliance
Non-compliance with the new excise duty requirements carries significant risks, including:
Penalties and Interest: KRA may impose fines and interest on unpaid taxes.
Agency Notices: The tax authority can instruct local banks or partners to withhold funds on behalf of KRA.
Platform Blockage: KRA has power to instruct the Communications Authority of Kenya to block access to the non-compliant platforms, potentially disrupting operations and affecting user access.
Reputational Damage: Non-compliance erodes trust among users, which is critical in the highly competitive crypto market.
In Conclusion
Kenya’s 2025 crypto tax reforms mark a turning point.
By replacing a broad, inefficient tax with a targeted excise duty on service providers, the government has shown a commitment to fostering innovation while protecting revenue. The change aligns Kenya with global best practices and sends a clear signal: the country is open for crypto business.
Whether you're a lambo boy, investor, or platform operator, staying informed and compliant is more important than ever.
As the ecosystem evolves, so too will regulation. But for now, the path forward looks brighter and fairer for Kenya’s digital asset community.
🚀 May the pamp and lambo be with you! 🫡
Written by CPA Wachira Joseph
The author is an expert Crypto Tax Consultant & can be reached via wachira@cleartax.co.ke
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