BAK Moves To Court To Challenge The Digital Asset Tax Introduced By Finance Act 2023

The Blockchain Association of Kenya (BAK) has filed a petition before the High Court of Kenya challenging the legality and constitutionality of the Digital Asset Tax (DAT) introduced by Finance Act 2023.

The DAT, introduced and passed as part of the Finance Bill 2023, imposes a 3% tax on digital asset trades set to take effect today, 1^st September 2023. It also imposes onerous compliance requirements.

The filing comes after the BAK, on the 25^th of May 2023, submitted its views on the proposed Digital Asset Tax (DAT) under the Finance Bill 2023 to the National Assembly’s Departmental Committee on Finance and National Planning.

In its submission, the BAK highlighted unclear classification of digital assets, ambiguity surrounding transfers of digital assets, impractical 5 day remittance timeframe, and a failure to consider loss-making transactions among others

Read Also: PKF Kenya Calls for Consistent Tax Policy to Improve Compliance

Allan Kakai, Director of legal & policy affairs at BAK said “despite being an income tax, the impugned digital asset tax is imposed on the gross value of the digital asset. This places a tax liability even on transactions that result in net loss, rather than focusing solely on the taxation of gains and profits.”

The BAK is deeply committed to advocating and lobbying for a conducive environment for innovation while ensuring legal clarity. Its petition aims to address concerns about the DAT’s impact on both our industry and the broader economy.

The matter will be mentioned before court on 28^th September 2023.

In the spirit of lobbying, the Blockchain Association of Kenya (BAK) is hosting digital asset stakeholder for the annual “Digital Assets Policy Safari (DAPS)” a forum on the 19^th of September 2023 to shape Kenya’s national digital asset policy.