Kenya moved towards regulating crypto by passing a bill on taxation on selling and spending crypto. Crypto tax in Kenya comes under capital gains where investors would need to inform the authorities about their crypto holdings and transactions.
Kenya ranks 5th in the world for crypto ownership rates with 8.5% of its population, that is 4,25 million people, holding crypto assets.
Do you have to pay crypto tax in Kenya?
Yes, under the new bill, you have to pay tax on crypto, while selling or spending it.
When do you have to pay tax on crypto in Kenya?
If you hold the crypto for less than a year, you will have to pay income tax on it. Otherwise. Capital gain taxes will apply.
What crypto transactions are taxable in Kenya?
Selling crypto and using crypto to pay for goods and services would be taxable in Kenya, under the new bill.
What are the Crypto Tax Rates in Kenya?
The income tax rates vary from 10% to 30% in Kenya, which would be levied if you hold the crypto for less than one year. Thereafter, capital gains tax rates would be levied. The banks, also, already charge a 20% commission on all crypto gains.
Kenya Income Tax Brackets (2023)
| Tax Bands | Annual | Monthly | Rates |
| On the first | Shs. 288,000 | Shs. 24,000 | 10% |
| On the next | Shs.100,000 | Shs. 8,333 | 25% |
| On all income in excess of | Shs. 388,000 | Shs. 32,332 | 30% |
| Personal relief of Kshs. 28,800 per annum (Kshs. 2,400 per month) |
Kenya Capital Gain Tax Rates (2023)
Capital Gain Tax Rates in Kenya are levied at a rate of 15% across all bases.
How is Tax Calculated on Cryptocurrency in Kenya?
Currently, the banks charge a commission of 20% for all crypto transactions. If the new bill passes, tax would be levied on crypto at income tax rate if held for less than a year, else capital gain tax rates would apply for holding crypto assets for more than a year.
If the bill passes, net gains would be subject to taxes, that the seeling price at time of transaction minus the cost price of acquiring the crypto. There are two ways used globally for calculating cost price: FIFO and ACB method.
According to FIFO Method, you sell your oldest acquired coin first and cost is calculated according to the respective prices at which the coin was bought. Whereas, in ACB, time of buying doesnt matter and average cost is taken into account.
Let’s take an example,
Say you bought 2 BTC for 20,000 Shs in 2020 and 4 BTC for 60,000 Shs in 2021. Then you sold 4 BTC in 2022 for 1,00,000 Shs:
- FIFO METHOD
You sell 2 BTC from 2020 and 2 BTC from 2021. So cost price is:
= 20,000 + (2/4)*60,000
= 50,000 Shs
Profit = 1,00,000 – 50,000
= 50,000
Here, taxes are levied on 50,000 Shs.
- ACB METHOD:
All coins are of the same denomination. Therefore, cost price for one coin:
= (20,000 + 60,000)/6
= 13,333 Shs
So, cost price of 4 coins:
= 53,333 Shs
Profit = 1,00,000 – 53,333
= 46,666
Here, taxes are levied on 46,666 Shs.
Crypto Tax in Kenya – FAQs
Do you have to pay tax when you buy crypto in Kenya?
No, you don’t have to pay tax when you buy crypto in Kenya.
Do you have to pay tax when you sell crypto in Kenya?
Yes, you have to pay tax when you sell crypto in Kenya.
Do you have to pay tax when transferring crypto in Kenya?
No, you don’t have to pay tax when transferring crypto in Kenya.
Do you have to pay tax when spending crypto in Kenya?
Yes, you have to pay tax when spending crypto in Kenya.
Is swapping crypto taxable?
It is unclear whether swapping crypto is subject to taxation in Kenya.
How much tax on crypto gains in Kenya?
If you’re holding the crypto asset for less than a year:
| Tax Bands | Annual | Monthly | Rates |
| On the first | Shs. 288,000 | Shs. 24,000 | 10% |
| On the next | Shs.100,000 | Shs. 8,333 | 25% |
| On all income in excess of | Shs. 388,000 | Shs. 32,332 | 30% |
| Personal relief of Kshs. 28,800 per annum (Kshs. 2,400 per month) |
If you’re holding the crypto asset for more than a year:
A constant rate of 15%.
How do I avoid capital gains tax on crypto in Kenya?
A deduction of Kshs 28,800 per annum is provided on income tax. Therefore, selling the crypto asset within a year of acquiring it might reduce your tax liabilities.
Market Research Intern, Octaloop
Maitreyee takes a keen interest in financial technologies and their potential to transform lives at the grassroots. Put together with her penchant for Economic Research, she brings tonnes of academic and actionable insight into our products. Maitreyee is contributing at Binamite as a Market Research Intern, and when she's not doing that, you can find her exploring the city or buried in a book.