Cryptocurrency companies operating in Kenya are intensifying efforts to challenge the country’s Digital Asset Tax (DAT), which mandates a three percent deduction from the gross income generated from exchange or transfers of digital assets.
The Virtual Asset Service Providers (VASPs) plan to hire a global tax advisory firm to back their anti-tax arguments.
The three percent tax —implemented in September 2023— applies to all transactions regardless of whether users made a profit or loss or are simply moving assets between wallets or exchanges.
Read also: Kenya moves to regulate cryptocurrency with new virtual assets bill
Fundraising underway in Kenya for legal tax challenge
The coalition of VASPs majorly intends to enlist the expertise of a prominent tax consultancy, potentially one of the “Big Four” firms like PwC, according to Mariblock.
Meanwhile, the group has initiated a fundraising campaign targeting VASPs across Kenya to finance their legal battle. They have set a goal of $15,000 and have already secured $6,000 in pledged donations.
In a joint statement, Apollo Sande, Luno’s Kenyan country manager, and Chebet Kipingo, Busha’s business operations manager, voiced the industry’s concerns.
“The Finance Bill 2025 represents our final battleground before catastrophic taxation policies permanently damage Kenya’s digital asset ecosystem. This isn’t merely another regulatory challenge—the proposed 3% Digital Asset Tax threatens the very existence of our businesses and Kenya’s position as an African crypto hub.”
They further emphasised the critical timeline, stating, “Time is rapidly running out. Beyond this critical window, our ability to influence this process will not only become exponentially more difficult but potentially impossible.”
Read also: Kenya ranked 21st globally in crypto usage as IMF pushes for regulatory framework
Behind the legal fight and the government’s position
The implementation of the DAT has been fraught with legal challenges. Following widespread protests against the amended Finance Act in June 2023, President William Ruto withdrew the bill but later revived it.
The Blockchain Association of Kenya (BAK) subsequently filed a lawsuit to stop the DAT, citing concerns about its potential to stifle blockchain innovation. While a court of appeals initially sided with the BAK, the Supreme Court ultimately overturned this decision, declaring the act constitutional and paving the way for the tax implementation.
Kenya’s push for the DAT and other tax increases may be linked to its previous credit arrangement with the International Monetary Fund (IMF), which required the country to boost its tax revenue.
Despite failing to meet this requirement under the previous deal, leading to its cancellation, the government remains focused on increasing tax collection from the growing digital asset sector.