Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi, has clarified the Finance Bill 2026 tax concerns regarding bread and motor vehicles.
According to Mbadi, the public has raised concerns about the potential Value Added Tax (VAT) on bread. The CS explained that the Finance Bill 2026 does not propose any VAT on bread.
Instead, the proposal to tax bread is a recycled issue raised in previous debates and is not a current component of the bill, according to the CS.
“The Finance Bill 2026 does not propose VAT on bread. This issue has been recycled from previous debates, but it is not part of the Bill,’ John Mbadi clarified on May 25.
Finance Bill 2026 VAT Proposal on Staple Food Products
CS Mbadi noted that the Bill is not focused on increasing tax rates; instead, it focuses on establishing administrative measures while increasing the number of people in tax brackets.
Further, the Bill does not list any basic staple food products, including bread, maize flour, milk, and other essentials, in the introduction of the new value-added tax.
Also Read: Mitumba Tax, Rental Tax Among Contentious Proposals Dropped in Finance Bill 2026
Basic staple products under the Finance Bill 2026 will continue to benefit from VAT exemption and zero-rating status.
Citing the lack of a listing of the VAT on staple food products, CS Mbadi has emphasized that the claims circulating about the introduction of a standard 16% tax on bread in Kenya are not in the official Bill.
Additionally, the CS noted that, unlike in the past, Bill proposal discussion, including the 2024 discussion, the 2026 Bill is established to avoid directly taxing stable household products.
However, the Bill currently proposes expanding the exemption for certain agricultural and food items to support food production.
Under the Bill, agricultural items, including raw materials for animal feed and inputs that support food production, will be subject to an expanded VAT exemption.
Also Read: Treasury Explains Proposed Change in Deadlines for Filing KRA Returns Under Finance Bill 2026
Taxes on Motor Vehicle
Following the controversial claims on the reintroduction of the 2.5% annual motor vehicle circulation tax, CS John Mbadi stated that the Bill does not have a proposal on the vehicle ownership tax.
In the Finance Bill 2026, the proposals on motor vehicles include the 50% of excise duty for classic vehicles whose year of first registration is at least 30 years before the date of purchase and is valued at least KSh 10 million exclusive of the depreciation.
In addition, the Bill proposes a standard 16% VAT on electric vehicles, motorcycles, and buses, removing the previous zero-rated taxes.
Further, according to the Bill, the East African Community Customs Management Act (EACCMA) is proposed to cover all fees and levies, including the processing fee on duty-free motor vehicles.
CS John Mbadi has urged the public to refrain from sharing unconfirmed proposed taxes in the Finance Bill 2026, from what he described as recycled discussion of the past years.
