The National Assembly has released details of the Finance Bill 2026, outlining proposed changes to mobile phone taxation, pension benefits, tax administration, and tax relief measures.
Describing the Finance Bill as an annual piece of legislation through which the government proposes changes to tax laws and tax administration measures, the National Assembly further explained that revenue collected through taxes helps fund key public services and development projects, including roads, healthcare, education, water projects, electricity, security, and salaries for public servants.
The Finance Bill 2026 aims to raise revenue for public services, improve tax compliance, close tax loopholes, and simplify tax procedures.
“A finance bill proposes measure for tax collection and administration to fund development and public services,” the assembly confirmed.
No New Phone Tax? What Finance Bill 2026 Really Says
One of the key proposals in the Finance Bill 2026 relates to mobile phone taxation. According to the Bill, no new tax is being introduced on mobile phones.
Instead, the proposal changes depending on whether the existing excise duty is collected. Currently, excise duty is charged when phones are imported into Kenya or when they are released from a factory.
According to the proposed framework, the tax would be charged only when a phone is activated on a mobile network.
Under the current taxation structure, mobile phones are subject to multiple charges at importation, including;
- 16 per cent VAT
- 10 per cent excise duty
- 25 per cent import duty
- 5 per cent Import Declaration Fee
- 2 per cent Railway Development Levy
These charges amount to an approximate total tax burden of 55.5 per cent.
The Bill proposes replacing the current framework with a single 25 per cent mobile phone excise duty that would be collected upon activation of the device rather than at the point of importation or factory release.
Tax-Free Pension Benefits for Dependants and Families
The Finance Bill 2026 proposes that pension benefits paid to dependants or beneficiaries of a deceased member of a pension scheme will not be subject to income tax.
Under the proposed changes, eligible beneficiaries will receive the full pension payout without any tax deductions upon the death of a scheme member.
The beneficiaries covered under this exemption include:
- Spouse
- Children
- Dependants
Also Read: Treasury Responds to Viral Finance Bill 2026 Tax Claims
This proposal means that families will retain the entire pension amount left by their deceased relatives, with no income tax applied to the benefits.
Tax Amnesty on Penalties and Interest for Past Tax Debts Proposal
Finance Bill 2026 introduces a tax amnesty proposal aimed at addressing past tax debts through relief on penalties and interest.
Under the proposal, taxpayers who have cleared their principal tax obligations by 31 December 2025 may have penalties and interest waived automatically.
Other taxpayers with outstanding obligations may qualify for relief by entering into an approved payment plan.
The measure is designed to support compliance and provide relief on accumulated tax liabilities.
Also Read: Mitumba Tax, Rental Tax Among Contentious Proposals Dropped in Finance Bill 2026
In summary, the proposal offers government-backed relief on old tax penalties and interest to encourage settlement of outstanding tax debts and improve compliance.
Parliament Clarifies Claims on Land, Mobile Money and Digital Tax Proposals
The National Assembly has clarified provisions in the Finance Bill 2026, addressing claims circulating online regarding its contents.
“Several claims circulating online are not contained in the Finance Bill 2026,” the National Assembly noted.
According to the official communication, the Bill does not convert freehold land to leasehold and does not impose new taxes on freehold land.
It further states that the Bill does not introduce new VAT on M-Pesa transactions and does not impose withholding tax on digital content monetization.
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