The Finance Bill 2026 has undergone revisions following public debate, stakeholder input, and internal review by the National Treasury.
Acting on recommendations and views of various stakeholders, the Finance and National Planning Committee has addressed concerns over some proposed tax measures. The Committee has removed several proposals and made new adjustments in key sectors, including taxation, digital finance, and infrastructure funding.
The changes come amid heightened public interest in how the Bill will shape household costs, business operations, and Kenya’s economic policy direction.
Govt Drops Key Tax Proposals After Public and Policy Review
The Finance Bill 2026 has undergone revisions following scrutiny by stakeholders and the National Treasury, leading to the withdrawal of several tax proposals, including:
Also Read: How New Tax Proposals in Finance Bill 2026 Will Affect Mitumba and Smartphones
- The proposal to introduce section 12H of the Income Tax Act on income from importation of worn clothing, footwear and other worn articles (mitumba tax) under tariff heading 6309
- Proposal to increase Residential Rental Income Tax from 7.5% to 10% under paragraph 10 of the Third Schedule to the Income Tax Act
- Proposal to exempt human blood and animal blood prepared for therapeutic, prophylactic, or diagnostic use under tariff number 3002.90.00 from VAT
- Proposal to amend the definition of “import” under section 2 of the Excise Duty Act so that goods originating from East African Community Partner States meeting EAC Rules of Origin would not be treated as imports
- Proposal to amend the Second Schedule to the Excise Duty Act by inserting the words “National Intelligence Service” after “Kenya Defense Forces” in paragraph 11
- Proposal to change excise duty structure on imported ceramic sanitary ware from “5% of customs value or KSh 200 per square meter” to “5% of excisable value or KSh 50 per kilogram, whichever is higher”
- Proposal to delete section 6A(4) of the Tax Procedures Act, suspending provisions in international agreements or treaties on import duty for steel billets and wire rods for two years
- Proposal to amend the definition of “East African Community Partner States” under section 2 of the Miscellaneous Fees and Levies Act to include any other country granted membership under the EAC Treaty
New Amendments Introduced in the 2026 Finance Bill
While several proposals were dropped, the final Finance Bill 2026 introduced new amendments, including one on imported ceramic flags, paving, hearth, or wall tiles under tariff heading 6907, retaining a 5% excise duty on the excisable value while removing the specific rate of KSh 200 per square meter.
In addition, the new Section 57, through the merger of the Road Maintenance Levy Fund (Amendment) Act, 2026, into the Finance Bill, 2026, proposes to reduce the Road Maintenance Levy allocation under Section 3(2) of the Road Maintenance Levy Fund Act from KSh 3 to KSh 1.50 per unit.
Also Read: Treasury Explains Proposed Change in Deadlines for Filing KRA Returns Under Finance Bill 2026
Clarifications on Digital Economy, Mobile Phones, and Virtual Assets
The government has also responded to public concerns regarding taxation of mobile phones, digital payments, and virtual assets, clarifying that the proposed changes to smartphone taxation do not introduce additional taxes but instead consolidate existing charges such as VAT, Import Declaration Fee (IDF), and Railway Development Levy (RDL) into a single excise duty.
Furthermore, concerns that the “point of activation” rule could lead to double taxation or surveillance have been addressed, with the government stating that the Communications Authority of Kenya will develop regulations to prevent such outcomes.
These safeguards are expected to cover second-hand devices, tourists, and previously taxed phones, while remaining compliant with Kenya’s Data Protection framework.
On virtual assets, the Bill does not introduce new taxes on cryptocurrencies but instead establishes a reporting framework for Virtual Asset Service Providers (VASPs). These entities will be required to maintain transaction records and submit data for tax compliance, as with existing requirements for financial institutions.
