Finance Bill, 2026 offers no relief to struggling Kenyans, tax expert say

Associate-Tax and Exchange Control Department at Cliffe Decker Hofmeyr Kenya office, Denis Maina, has raised concerns over the Finance Bill 2026, saying it does not provide meaningful relief to Kenyans struggling with the high cost of living, even though he described it as largely balanced and without major new taxes.

Speaking during a Radio Generation interview on Wednesday, Maina said the Bill is mainly focused on administrative and compliance changes rather than easing economic pressure on households.

“My honest opinion, it’s a balanced Finance Bill. Looking at the proposals in the Bill, there are no major provisions or proposals that will change; there are no introductions of taxes, it’s mainly administrative in nature and tying up issues of compliance,” he noted.

He added that expectations had been high for relief measures to reduce the burden on citizens.

“Earlier in the year, somebody had said that some relief would be brought about in the Finance Bill to cushion the common Mwananchi from the cost of living,” he said.

Maina pointed to earlier proposals suggesting higher personal tax relief and exemption of workers earning below Sh30,000, saying such measures could have increased disposable income.

His remarks come as the proposed Finance Bill,2026 is set to introduce several tax adjustments aimed at widening revenue collection without introducing major new taxes.

The proposals include an increase in rental income tax from 7.5 per cent to 10 per cent, new taxes on digital and platform-based financial services, expanded withholding tax on gambling winnings and scrap metal sales, and stricter filing deadlines.

The Bill also proposes stronger enforcement powers for the Kenya Revenue Authority, including agency notices that could allow access to taxpayers’ bank accounts.

Other measures target cryptocurrency transactions, non-resident landlords, second-hand clothes imports, and introduce a tax amnesty on penalties and interest for unpaid taxes accumulated before December 2025.

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Going further, Maina questioned several existing levies, especially those affecting motorists. He criticised the Road Maintenance Levy of Sh25 per litre of fuel, arguing that road conditions do not reflect the funds collected.

“We are never really told that, for example, in January, we collected Sh2 billion as far as the road maintenance levy is concerned,” he added.

He also questioned the Railway Development Levy, saying there was little visible improvement in rail infrastructure despite continued collections.

“I recently discovered that we have a Railway Development Levy, apart from the SGR, even the locomotives and the carriages, we don’t even buy new ones,” he said.

On fuel taxation, Maina questioned the continued application of VAT on petroleum products, arguing that VAT was meant for goods where value is added.

He also opposed proposed increases in bottled water taxes, saying many Kenyans depend on bottled water due to limited access to clean drinking water, especially in drought-prone areas.

On mobile phone taxation, he dismissed fears of sharp price increases, saying the impact would be marginal after VAT and excise adjustments.

Despite his criticism, Maina supported the proposed tax amnesty covering penalties and interest on old tax debts.

“Kenya Revenue Authority is willing to waive the penalty and interest if you pay that tax by December of this year,” he explained.

He also backed reforms on Real Estate Investment Trusts and trust income taxation, saying they would ease pressure on investors and beneficiaries.

On the proposed Mitumba tax, he argued that compliant traders could benefit from a reduced burden.

However, he warned against the possible return of agency notices allowing the Kenya Revenue Authority to recover disputed taxes directly from bank accounts before appeals are concluded, saying it could weaken taxpayer protections.

He concluded by questioning how value addition is defined in Kenya’s tax system, arguing that transport and distribution should not automatically attract additional taxation.