Crypto taxes in Kenya: Everything you need to know about the 3 percent DAT
For years, cryptocurrency in Kenya has been a fast-moving, high-reward, and largely unregulated sector. From Bitcoin’s early days as a niche investment to its use in remittances, trading, and wealth preservation, and money laundering crypto has been both an opportunity and a challenge for regulators.
However, in 2023, Kenya’s government made it clear that crypto is no longer tax-free. With the introduction of the Digital Asset Tax (DAT), traders, investors, and businesses accepting crypto must comply with new tax obligations.
So, what does this mean for you? Do you need to pay crypto taxes? How does Kenya’s approach compare to other countries? And what’s the impact on the industry? Let’s break it down.
Why crypto taxes became inevitable
Kenya is one of Africa’s leading crypto markets, ranking high in adoption, peer-to-peer (P2P) trading, and digital payments. Platforms like Yellow Card, Binance, OKX, and bitget have made it easy for Kenyans to trade and store crypto assets.
- In 2023, Kenya ranked 5th globally in crypto adoption, with transactions exceeding
- $20 million annually.
- Crypto became a hedge against inflation, a tool for cross-border remittances, and an alternative to traditional banking.
- However, concerns over money laundering, tax evasion, and financial instability pushed regulators toward formal oversight.
As crypto became too big to ignore, the Kenya Revenue Authority (KRA) stepped in to ensure the government gets a share of the billions flowing through digital assets.
Understanding the Digital Asset Tax (DAT) in Kenya
What Changed?
In 2023, the government introduced the Digital Asset Tax (DAT) under the Finance Act 2023, marking Kenya’s first structured approach to crypto taxation.
- A 3 percent tax on digital asset transactions was implemented, affecting traders, investors, and businesses.
- The tax applies whenever you sell, trade, or convert crypto into fiat (KES).
- The tax is deducted at the source, meaning crypto exchanges and platforms must comply with KRA’s reporting rules.
For instance, if you sell Bitcoin for Ksh 200,000, a tax deduction of Ksh 6,000 applies, leaving you with Ksh 194,000 before other costs.
Who needs to pay crypto tax?
If you’re involved in crypto in Kenya, here’s when taxes apply:
- Traders – If you actively buy and sell crypto for profit.
- Investors – If you hold crypto and cash out later.
- Businesses Accepting Crypto – If you receive crypto payments for goods or services.
- NFT Creators & Sellers – Selling NFTs counts as a taxable digital asset transaction.
When Do You Get Taxed?
- When you sell crypto for fiat (KES, USD, etc.).
- When you convert one crypto into another (e.g., BTC to ETH).
- When you use crypto to pay for goods or services.
For instance, if you bought Ethereum for Ksh 50,000 and later sold it for Ksh 80,000, the tax applies to the full Ksh 80,000, not just your profit.
How Kenya’s Crypto Tax Compares to Other African Countries
Kenya is not alone in taxing crypto. Many African nations have introduced regulations:
- South Africa – Treats crypto as property and applies capital gains tax.
- Nigeria – Introduced a ten percent tax on digital assets in 2023.
- Ghana & Uganda – Exploring crypto tax policies but have not passed major laws yet.
Kenya’s three percent tax is relatively low compared to global markets but still impacts traders and businesses.
How Crypto Taxes Are Impacting Kenya’s Market
Since crypto taxation took effect, traders, investors, and platforms have had to adjust.
The Positive Side
- Legitimization of Crypto – The government officially recognizes crypto as a financial asset.
- More Institutional Interest – Businesses can adopt digital assets with regulatory clarity.
- Increased Security – KRA’s involvement may help curb scams and fraud.
The Challenges
- Rise in P2P Transactions – Many traders are shifting to peer-to-peer trading to avoid taxes.
- Higher Costs for Traders – The three percent deduction impacts frequent traders.
- Compliance Burden – Crypto platforms must track, report, and deduct taxes, leading to higher fees.
Platforms like Yellow Card have had to adapt while maintaining efficient trading solutions.
What’s Next for Crypto Regulation in Kenya?
While crypto taxation is just the beginning, experts predict further regulatory changes:
- Capital Gains Tax – Future laws may introduce a tax on crypto profits separate from transaction taxes.
- Stronger KYC (Know Your Customer) Regulations – Crypto users may face stricter verification.
- More Banking Partnerships – Kenyan banks could integrate with crypto exchanges.
As the crypto market evolves, staying informed and compliant is key to navigating the new landscape.
