Editor's Review

Education emerged as one of the major beneficiaries, with Ksh4.9 billion allocated to convert 20,000 teacher interns to permanent and pensionable terms.

The National Assembly’s Finance Committee officially tabled its report on the Finance Bill 2026 on June 16, 2026, following stakeholder consultations on the proposed tax legislation.

The Bill is currently at the committee stage in the National Assembly, where MPs are expected to propose and vote on amendments before it is passed into law for implementation in the 2026/2027 financial year.

Based on recent public participation conducted across the country, here are some of the key aspects of the proposed law that Kenyans have welcomed, and those that have attracted criticism.

Hits

Broadening the Tax Base

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Unlike previous Finance Bills that proposed new taxes, some stakeholders have noted that the current Bill focuses on broadening the tax base and improving tax administration.

This has been one of the key selling points advanced by Treasury CS John Mbadi during his public engagements. According to Mbadi, many Kenyans in formal employment are already heavily taxed, making it necessary for the government to widen the tax net rather than impose additional taxes on the same taxpayers.

Digital Transactions

Another proposal that has received support from some Kenyans is the exclusion of telcos from VAT proposals targeting the digital payments industry. There had been fears that the proposed 16% VAT on services offered by digital payment providers would ultimately lead to higher mobile money transfer charges for consumers.

However, Mbadi has maintained that the proposal targets digital intermediaries and foreign payment platforms that provide services to digital payment providers and earn revenue from transactions made by Kenyans.

Rental Tax

There had been concerns that the government planned to increase rental income tax from 7.5% to 10%. However, the proposal was shelved. During the public participation process, both landlords and tenants argued that the increase could have resulted in higher rents and added pressure on household budgets.

Misses

PAYE Review

One of the biggest concerns raised by Kenyans is the absence of a proposal to review PAYE, as previously promised by the government. Many had hoped that the first Ksh30,000 of monthly income would be exempt from PAYE and that tax bands would be adjusted to reduce the burden on salaried workers.

Such changes are seen as a potential relief measure for employed Kenyans who already shoulder deductions such as the Housing Levy, SHIF, and enhanced NSSF contributions.

On his part, Mbadi has reiterated that the government remains committed to implementing the proposal announced earlier this year. However, the Treasury is still conducting simulations on the various options, citing an estimated Ksh40 billion revenue shortfall that could result from the changes.

File Image Treasury CS John Mbadi

Tax Dispute Reforms

During the public participation process, Kenyans also raised concerns over proposals seeking to amend the Tax Procedures Act by removing provisions that currently halt tax collection during tax disputes and appeals.

Critics argue that the changes could grant KRA the power to freeze bank accounts and recover disputed tax amounts before appeals are fully determined. As a result, many taxpayers are pushing for the proposal to be reviewed.

25% Excise Duty on Mobile Phones

Despite Mbadi’s assurance that the proposed excise duty could lower the overall cost of mobile phones because other taxes, such as VAT, would be removed, a section of Kenyans remains skeptical. The proposal to make the tax payable at the point of activation has also sparked privacy concerns.

2026/2027 Budget

Beyond the Finance Bill 2026, several budgetary allocations announced for the 2026/2027 financial year have been positively received by stakeholders.

Education emerged as one of the major beneficiaries, with Ksh4.9 billion allocated to convert 20,000 teacher interns to permanent and pensionable terms.

Farmers are also expected to benefit from the Ksh18 billion allocation for fertiliser subsidies and an additional Ksh2 billion for seed subsidies.

Meanwhile, businesses have welcomed the government’s plan to clear Ksh155 billion in verified pending bills.