Kenya denies new crypto taxes, expands virtual asset reporting

Treasury Cabinet Secretary John Mbadi on May 25 denied that the Finance Bill 2026 creates new taxes on cryptocurrency transactions or digital content. He described the proposals as measures to introduce reporting and record-keeping standards for virtual asset service providers.

Mbadi said the changes aim to close gaps in the legal framework created by rapid growth in digital and virtual asset activity. “The rapid growth of digital and virtual asset transactions has created a gap within the existing legal framework due to the absence of clear reporting obligations governing such transactions. The proposal, therefore, seeks to apply reporting and record‑keeping principles that are already common within traditional financial and commercial activities to the emerging virtual asset sector,” he stated.

An independent technical review by KPMG finds the bill would insert broad disclosure obligations into the Tax Procedures Act. Virtual Asset Service Providers, including cryptocurrency exchanges, custodial wallets and token marketplaces, would be required to compile and submit comprehensive annual activity reports to the Kenya Revenue Authority.

The proposed text would permit Kenyan authorities to exchange transaction records and user identity data with foreign tax jurisdictions, creating a cross-border reporting framework and a persistent digital audit trail for capital gains and multi-jurisdictional virtual asset operations.

KPMG’s review also identifies changes to other tax rules. The bill would broaden the definition of “management and professional fees” in the Income Tax Act to include interchange and merchant service fees within card networks, and it would standardize value-added tax treatment for certain platform-based services. KPMG estimates these provisions will raise compliance and operational costs for web3 and fintech platforms by requiring enhanced transaction-tracking and internal reporting systems.

Mbadi rejected claims that the bill grants KRA or law enforcement direct access to private mobile money logs or personal smartphone files. A Treasury follow-up statement read: “Existing data protection and privacy laws remain fully in force. So, KRA cannot access your Mpesa account or statements.”

The Finance Committee of Parliament will collect oral submissions on the bill before presenting a final version to the full legislature. Debate over the Finance Bill 2026 has coincided with public concern about fuel prices and the cost of living.