Kenya’s Finance Bill 2026 has introduced several proposed tax changes aimed at increasing government revenue and expanding the country’s tax base. According to Treasury estimates, the government hopes to raise additional revenue in the 2026/2027 financial year through adjustments to existing taxes, expanded enforcement measures, and new tax proposals.
Below are some of the key revised taxes and proposals currently attracting public attention.
1. Increase in Tax on Mobile Phones
One of the most discussed proposals is the increase in excise duty on mobile phones from 10% to 25%.
Under the proposal, the tax would become payable when a phone is activated on a mobile network. The measure is intended to target untaxed and illegally imported devices entering the Kenyan market.
2. Betting and Gambling Winnings Tax
The Finance Bill 2026 proposes changes affecting betting, gaming, and lottery winnings.
Under the proposal:
- Betting winnings remain subject to a 20% withholding tax
- The tax excludes the amount originally staked by the bettor
- Betting credits and gaming tokens may also attract excise duty at the point of conversion into betting credits
3. Rental Income Tax Changes
The government has proposed increasing the monthly rental income tax rate from 7.5% to 10%.
Additionally, a new non-resident rental income tax has been proposed for foreign individuals or companies earning rental income from property located in Kenya. The tax would apply specifically to landlords who are not resident in Kenya but receive rental payments from Kenyan properties.
4. New Tax on Scrap Metal Sales
The bill proposes introducing a 1.5% withholding tax on the gross value of scrap metal sales.
Income earned from scrap metal trading would also be formally classified as taxable income under the Income Tax Act.
5. Changes to Tax Filing Deadlines
The Finance Bill proposes shortening tax filing deadlines.
If approved:
- Annual tax filing deadlines may move from June 30 to April 30
- Nil returns could be required by January 31 of the following year instead of the current schedule
6. Proposed Tax on Second-Hand Clothing Imports
The bill proposes introducing income tax on imported second-hand clothing and similar goods at an implied rate of 1.5% of customs value.
This proposal could affect traders involved in Kenya’s mitumba industry.
7. VAT on Digital and Platform-Based Financial Services
The Finance Bill also proposes VAT charges on selected digital and platform-based financial services.
The move reflects the government’s increasing focus on taxing the growing digital economy.
8. PAYE Debate and Income Tax Discussions
Although earlier government statements suggested possible PAYE reductions for lower-income earners, the Finance Bill 2026 did not immediately include these proposed relief measures.
Treasury officials later explained that the government’s focus remains on broadening the tax base rather than introducing major new tax rate reductions at this stage.
9. Focus on Expanding Tax Collection
According to Treasury projections, the Kenya Revenue Authority (KRA) is expected to increase tax collection significantly in the coming financial year.
Rather than introducing entirely new taxes across all sectors, the government says it intends to improve compliance, widen the tax net, and strengthen enforcement systems.
Public Reaction
The proposed Finance Bill 2026 has generated mixed reactions among Kenyans. Some citizens and business groups argue that certain proposals could increase the cost of living and place additional pressure on households and businesses.
Others believe the government is attempting to stabilize public finances and improve revenue collection amid economic challenges and rising expenditure demands.
The Finance Bill 2026 remains subject to parliamentary debate and public participation before becoming law. Some proposals may be amended, removed, or adjusted during the legislative process.
As discussions continue, many Kenyans will be closely watching how the proposed taxes could affect daily expenses, business operations, digital services, imports, and overall economic activity in the coming years.
