Kenya’s Digital Asset Tax After the Finance Bill 2026: What Crypto Businesses and Investors Now Owe

Kenya has taxed digital assets three different ways in three years, and much of the commentary crypto businesses rely on still describes the wrong version. The 3% Digital Asset Tax introduced in July 2023 was deleted in 2025 and replaced with a 10% excise duty on a much narrower base, and the Finance Act 2026 has now added a mandatory reporting and information-exchange regime on top of that. None of this is the same question as VASP licensing under the Virtual Asset Service Providers Act 2025 and its 2026 Regulations; a business can be fully licensed and still get its tax treatment wrong, or unlicensed and still owe tax. This article sets out what a crypto exchange, wallet provider, token issuer or individual investor in Kenya actually owes today.

From a 3% Tax on Value to a 10% Excise Duty on Fees

The Finance Act 2023 inserted section 12F into the Income Tax Act, creating a Digital Asset Tax charged at 3% of the transfer or exchange value of a digital asset, a term the section defined broadly to cover cryptocurrencies, token codes and non-fungible tokens. The duty to deduct and remit fell on the platform owner or the person facilitating the exchange, making every Kenyan exchange a withholding agent on gross transaction value regardless of whether the trade was profitable. It took effect on 1 July 2023.

The Finance Act 2025 deleted section 12F outright and, effective from 1 July 2025, introduced an excise duty of 10% on fees charged on virtual asset transactions by virtual asset providers. The shift in tax base matters more than the headline rate: the old tax was 3% of the full value moving through a trade, while the new duty is 10% of the fee or commission the platform charges for handling it, a far smaller number in almost every case. A platform charging a 1% fee on a KES 100,000 trade now attracts 10% excise duty on that KES 1,000 fee, KES 100, rather than the KES 3,000 the old DAT would have charged on the trade itself. Anyone still budgeting for a 3% charge on trade value is working from a repealed provision.

The excise duty is payable by the exchange, broker or trading platform on its own fee income, not by the end investor, in the same way excise duty applies to fees on other financial services in Kenya. It is the platform’s obligation to register, account for the duty, and remit it to KRA; an investor is no longer taxed at each transaction under this provision, though that does not mean crypto gains are untaxed altogether. One gap worth flagging: the Excise Duty Act’s virtual asset provision has no self-contained definition of “virtual asset” or “virtual asset service provider,” so KRA and most advisers read the term consistently with the activities licensed under the VASP Act 2025. A business at the margins, such as one offering only closed-loop loyalty points, should seek a specific ruling rather than assume its position.

Finance Act 2026: Reporting, Not a New Rate

The Finance Act 2026 did not touch the excise duty rate or reintroduce a value-based digital asset tax. Its contribution is a reporting framework, inserted into the Tax Procedures Act as new sections 6C and 6D, effective 1 July 2026. Section 6C requires every VASP, defined by reference to the licensing regime under the Virtual Asset Service Providers Act 2025, to file annual information returns identifying “reportable users” and controlling persons; a VASP with no reportable users must still file a nil return. Section 6D lets the Commissioner enter agreements with other jurisdictions for automatic exchange of virtual asset transaction information, aligning Kenya with the OECD’s Crypto-Asset Reporting Framework.

The penalties are real and separate from any tax liability: a false statement attracts KES 100,000 or up to three years’ imprisonment or both, an omission attracts KES 100,000, and failing to file at all, including a required nil return, attracts up to KES 1 million. A defence is available where the provider made reasonable efforts to obtain the missing information from a third party, but the burden is on the VASP to show that effort. For a licensed exchange, this means a compliance function that tracks reportable users year-round.

Income Tax Still Applies Outside the Excise Duty

Repealing the Digital Asset Tax did not exempt digital assets from Kenya’s ordinary income tax rules. KRA’s position, unaffected by the 2025 or 2026 changes, is that gains from digital asset trading fall under capital gains tax or income tax depending on the pattern of activity: occasional disposals are more likely treated as capital gains, while frequent, business-like trading is a trade subject to income tax. This is assessed on the trader’s own gain, separately from the excise duty on platform fees, and it is the piece most investors overlook once they hear the digital asset tax was scrapped.

None of this alters the separate licensing obligation under the VASP Act 2025 and the VASP Regulations 2026, gazetted as Legal Notice No. 134 of 2026, which require exchanges, custodial wallet providers, brokers and token issuers to hold a licence from the Central Bank of Kenya or Capital Markets Authority. A business can be correctly licensed and still exposed on the tax side if it has not registered for excise duty or built the section 6C reporting workflow, and sorting out tax registration does not substitute for the licensing deadline that applies to existing operators.