The Finance Act, 2026 introduced changes to the definitions contained in Section 3(1) of the Tax Procedures Act, CAP. 469B.
The changes relate to:
- Deletion of the definition of “certificate of origin”
- Introduction of “virtual asset”
- Introduction of “virtual asset service provider”
1. Certificate of Origin
A certificate of origin is a document used in international trade to establish the country where goods originate.
For example, a Kenyan company exporting goods to Uganda may be required to provide documentation confirming that the goods originated in Kenya.
What Changed?
The Finance Act, 2026 deleted the definition of “certificate of origin” from the Tax Procedures Act.
Does this mean certificates of origin have been abolished?
No. The deletion of the definition from the TPA does not, by itself, mean that certificates of origin are no longer required.
The change relates to the location of the legal framework. Origin documentation rules are expected to be dealt with under customs-focused legislation, particularly:
- East African Community Customs Management Act (EACCMA)
- Related customs regulations
THK Takeaway: Businesses involved in importation and exportation should continue maintaining proper customs documentation. The deletion of the definition should not be interpreted as permission to ignore origin requirements.
2. Virtual Asset
The Finance Act, 2026 introduced a definition of “virtual asset” into the TPA by referring to the meaning assigned under the Virtual Asset Service Providers Act, 2025.
In simple terms, a virtual asset is a digital representation of value covered by the legal definition under the VASP Act.
Examples commonly associated with virtual assets include:
- ₿ Bitcoin
- Ξ Ethereum
- Other crypto assets
However, not every digital record or digital item automatically qualifies as a virtual asset. The exact meaning depends on the VASP Act, 2025.
Why Is This Important?
The cross-reference creates consistency between tax administration and the regulatory framework for digital assets. It provides KRA with a legal reference point when dealing with transactions involving virtual assets.
Important: This definition does not, by itself, introduce one universal tax rate for all crypto transactions. The tax treatment depends on the nature of the transaction, the income involved, and the applicable tax provisions.
3. Virtual Asset Service Provider — VASP
A virtual asset service provider is a person or business providing services involving virtual assets within the scope of the VASP Act, 2025.
For example, a business operating a platform that facilitates virtual asset-related services may fall within the VASP framework, depending on its activities.
Why Does This Matter?
The amendment helps clarify which persons may fall within the TPA framework regarding:
- Reporting
- Recordkeeping
- Tax administration
- Enforcement
Businesses operating in the digital asset space should establish:
- Whether their activities fall within the VASP definition.
- What records they are required to maintain.
- Whether reporting obligations apply.
- Whether income earned from their activities is taxable.
- Whether other regulatory requirements apply.
Final Takeaway
The Finance Act, 2026:
- Deleted the definition of certificate of origin from the TPA.
- Introduced a cross-referenced definition of virtual asset.
- Introduced a cross-referenced definition of virtual asset service provider.
- Linked tax administration to the VASP Act, 2025.
Remember: A definition is not the same as a tax rate. Each transaction must be analysed based on the applicable tax law and facts.
Source: Finance Act, 2026 — Tax Procedures Act, CAP. 469B, Section 3(1), page 18.
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