Kenya's GenZ protests resume as 2026 finance bill imposes harsh regime for crypto traders

Kenya’s Finance Bill 2026 proposes to introduce a 10% excise duty on fees charged by Virtual Asset Service Providers (VASPs) for crypto trading and other activities.

The proposed excise duty on crypto platforms will be double the 5% tax on the betting industry. Such a move increases the cost of operations for VASPs, who either have to pass these costs on to their consumers through fees or absorb them as a reduction in profit margins.

Kenya expands tax powers and compliance, tightening across sectors

According to reports, in addition to the increased excise duties, VASPs must also follow other stringent measures. The VASPs bill requires crypto firms to pay a one-off licensing fee of KSh 150 million ($1.1 million) before they can undertake any activities in Kenya.

They also have to pay a KSh 2 million ($1.5 million) annual renewal fee to keep operating in Kenya.  In addition, the Finance Bill 2026 requires crypto exchange and trading platforms to provide annual reports to the KRA containing user and transaction details.

Kenya is still considered one of the major players in East Africa’s digital economy, and even in crypto adoption. The levying of a 10% excise duty on VASPs, along with mandatory reporting, will force crypto traders and platforms to move their operations to countries with a more favorable attitude toward cryptocurrencies. 

Such action might make Kenya lose its importance in terms of crypto volumes, leading to changes in regional liquidity and negatively affecting the general investor attitude toward cryptocurrencies issued in Africa. 

Foreign payment services and banks that work through credit cards in Kenya might increase tariffs due to new taxes and VAT applied to fintechs. Payments are important to the country, as they contribute to imports, exports, and diaspora remittances. Some provisions of the bill’s digital payments tax are being called for scrapping by market analysts.

As reported by Cryptopolitan, Binance is facing mounting pressure from Kenyan users due to frustrations over frozen accounts. This follows the exchange’s collaboration with Kenya’s DCI.

GenZ protests resume as economic pressures intensify

Following new details of the Finance Bill 2026, GenZ-led demonstrations are back in Nairobi and several large towns today. This is in response to the impact of increased taxation on digital services, crypto, mobile phones, and general financial transactions amid an ongoing recovery from previous cost-of-living shocks for household consumers and small businesses. 

The disruptions occasioned by the demonstrations will result in short-term economic losses for small-scale traders and businesses that rely heavily on cash flow.

The proposed bill affects individuals by increasing the cost of sending money digitally, conducting crypto transactions, buying new mobile phones, and transacting in digital currencies. Companies relying on M-Pesa, debit cards, and crypto will incur losses and increased overhead costs.

The bill consists of various clauses aimed at widening the tax base and enhancing collections. The KRA will now have the power to serve agency notice on banks, SACCOs, or mobile money service providers such as M-Pesa, even after a taxpayer has lodged an objection to the assessment of his/her taxes. 

Funds will be frozen or diverted to the tax authority during the objection period. Deadlines for filing tax returns will be shortened, with ordinary returns to be filed before April 30 rather than June 30, and nil returns before January 311, thus aligning with the filing deadlines. 

A private company’s undistributed profits will now be assumed to constitute 60% dividends to be taxed. VAT invoicing requirements will apply to businesses making taxable supplies, regardless of registration status, not just to registered businesses. VAT will apply only to taxable supplies.

New taxes will be imposed on digital payments: a 5% withholding tax on local card transactions, a 20% withholding tax on non-resident card transactions, and a 16% VAT on some digital payment services offered by the financial technology industry. 

Payment gateways may be considered royalties, thereby making them eligible for a 20% withholding tax, particularly when payments are made to foreign entities. 

The preferential 5% withholding tax on dividends paid to individuals of the East African Community will now be replaced by a 15% withholding tax. Lenders and leasers will be exempt from the EBITDA threshold of 30% interest deduction.

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