Kenyan Blockchain Association challenges digital asset tax in Court

A bold move by the Blockchain Association of Kenya to formally file a petition before the High Court of Kenya is a significant development that could have far-reaching implications for Kenya’s burgeoning digital asset ecosystem. 

The petition questions the constitutionality of the Digital Asset Tax (DAT), which is mandated by the Finance Act 2023 and set to go into effect on September 1, 2023.

The blockchain association has concerns about the Digital Asset Tax that was included in the country’s Finance Act of 2023. As it stands, the DAT imposes a 3% tax on transactions involving digital assets.

While taxes are a common way for governments to generate revenue, the Kenyan Blockchain Association claims that a strict application of the DAT could stunt the development of the industry, stifling innovation and discouraging investment.

Their main point is that a 3% tax on digital asset trades would cause people to avoid investing in the market, stifle the growth of local startups, and cause people to leave for countries with lower tax rates. According to them, this would undermine the government’s efforts to promote a dynamic and creative IT sector.

The Blockchain Association of Kenya plans to present extensive arguments in its legal challenge to the DAT starting on September 28, 2023. Their argument is likely to center on the potential loss of talent and investment in the digital asset industry as a result of the tax, as well as other perceived negative effects of the tax.

As the case proceeds through the Kenyan legal system, it will be interesting to see if the Blockchain Association of Kenya’s concerns are taken into account by the Kenyan government, and if the DAT is revised as a result. 

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