Kenya’s Finance Bill 2026 brings back taxes on everyday items and expands KRA powers, reviving fears sparked by the 2024 Gen Z protests.
President William Ruto’s government has unveiled a Finance Bill that resurrects the ghost of the 2024 Gen Z uprising, where dozens of protesters were killed and Parliament set ablaze, by reintroducing a sweeping array of taxes on everyday goods and services – from mobile phones and bottled water to coal, plastic basins, and even every credit cards swipe.. The Bill lands just under 15 months before voters return to the polls in August 2027, a
period when incumbents traditionally offer tax relief, not new burdens.. Buried deep in the 124‑page Bill are also draconian new powers for the Kenya Revenue Authority to automatically generate tax returns, penalise small businesses for electronic system failures, and re‑open old transactions going back five years.. The measures come at a moment of maximum distress for ordinary Kenyans, with annual inflation at a two‑year high and pleas from citizens, business leaders, and even the World
Bank for lower living costs going unanswered.. Annual inflation jumped to 5.6 per cent in April – the highest level since May 2024 – driven by surges in food and fuel costs.. A 13‑kilogramme cooking gas cylinder now costs Sh3,362, up 6.5 per cent from a year ago.. The World Bank has cut Kenya’s 2026 growth forecast to 4.4 per cent, warning that the Middle East conflict could push inflation four percentage points higher and
shave 2.6 per cent from household incomes.. Yet the Finance Bill 2026 does almost nothing to ease the pain, analysts said.. Instead of creating jobs for the millions of young Kenyans who poured into the streets two years ago, it raises the cost of the very tools they need to work – a mobile phone, a card payment, even a plastic basin.. President Ruto has faced repeated appeals from ordinary citizens, the business community, civil
servants, the IMF and the World Bank to bring down the cost of living.. The Treasury itself issued an unusual public plea for “innovative ideas” just weeks ago, acknowledging that the government has run out of room to tax.. But the Bill that has emerged points in the opposite direction.. “It is as if the past two years never happened,” said Ian, a former youth leader who gave only one name for fear of retribution..
“The government is tone deaf.. Every tax that sparked the Gen Z uprising is coming back, in some cases heavier than before.. This is not just a policy failure.. It is a political death wish.” The Finance Bill 2024 had proposed a 16 per cent VAT on bread, a 25 per cent excise on vegetable oil, and an “eco‑levy” on diapers, sanitary pads and phones.. When Gen Z‑led demonstrations erupted across 35 towns, police fired
live bullets.. At least 50 protesters were killed, hundreds were abducted, according to official figures.. On June 26, 2024, protesters briefly overran Parliament, setting part of the building on fire.. The next day, Ruto conceded defeat and withdrew the Bill.. The 2026 version replaces bread with bottled water, keeps the phone levy, adds new taxes on coal and plastics, and expands the net on digital payments, gambling winnings and even the fuel levy – though
one fuel tax was reduced.. The Bill’s most far‑reaching measure is a 25 per cent excise duty on telephones for cellular networks, payable not at import but at the moment of activation – the first time you insert a SIM card and turn on the phone.. For a smartphone costing Sh15,000, the tax adds Sh3,750.. Even a basic feature phone – used by millions for M‑Pesa and SMS – becomes significantly more expensive.. The government
has also introduced a VAT exemption for imported and locally purchased phones, but lawyers warn that this could pose a burden because suppliers cannot claim back input VAT, and that cost is simply embedded in the final price.. A detailed analysis by law firm Bowmans concludes: “Taxes payable at importation of phones would be reduced, but the tax cost would shift to excise duty charged upon purchase of the phone locally.” This means the phone
costs the same, the government just collects its money later, from the buyer instead of the importer.. The 2024 Bill tried to slap 16 per cent VAT on bread, sparking rage.. The 2026 Bill instead introduces a new excise duty on bottled water – which previously had no excise – at Sh6.41 per litre.. For a family in a Nairobi estate without reliable tap water, buying 10 litres of bottled water a week means paying
an extra Sh64 per week, over Sh3,300 a year.. Fruit juices under the new bill suffer a double blow of Sh14.14 per litre for unsweetened juice, and Sh20 per litre if sugar is added.. A two‑litre carton of juice costing Sh280 today could rise by roughly Sh28 to Sh40.. Coal still used by low‑income households for cooking and by jua kali artisans for metalwork now faces a 5 per cent excise duty for the first
time.. Plastic articles such as containers, basins and buckets attract a 10 per cent excise duty, previously only on imported plastics.. “Plastic containers prices for food storage, basins, buckets will go up,” said Sarah Kioko, a seller of household plastics in Naivasha.. “I will have to raise prices or close.” The Bill expands the definition of “royalty” to include fees paid to card schemes (Visa, Mastercard), payment networks, switching systems, and digital platforms.. That means
interchange fees – the amount your bank pays the merchant’s bank when you swipe – and merchant service charges become subject to withholding tax.. Bowmans warns that this is a direct response to a 2022 Supreme Court decision that had exempted interchange fees from tax.. The firm flags a critical risk where the new provision is likely to lead to a double deduction of withholding tax, since businesses will deduct tax on the entire merchant
service fee paid to an acquiring bank, while acquiring banks will also be required to deduct Kenyan withholding tax on the interchange fee paid to the issuing bank.. Every time you use a debit or credit card, two separate taxes could be applied.. Banks and payment processors will pass the extra cost to merchants, who will pass it to you in higher prices.. The Bill introduces a 20 per cent withholding tax on winnings from
betting, lotteries, prize competitions, and gaming.. If you place a Sh100 bet and win Sh10,000, the government takes Sh2,000 immediately.. This is in addition to the existing five per cent excise duty on the amount deposited into betting wallets.. A punter who deposits Sh1,000 and wins Sh20,000 will pay Sh50 excise on the deposit, plus Sh4,000 withholding tax on the winnings – total tax Sh4,050.. The Bill also imposes a 10 per cent excise duty
on fees charged by virtual asset providers (crypto exchanges and digital wallets), meaning every crypto trade or wallet transaction becomes more expensive.. Virtual asset service providers must also file detailed information returns on every user, with penalties up to Sh1 million for non‑compliance – modelled on the OECD’s Crypto‑Asset Reporting Framework.. Perhaps the most alarming provisions for ordinary Kenyans and small businesses are the new powers granted to the Kenya Revenue Authority.. The Bill amends
the Tax Procedures Act to allow the Commissioner to generate pre‑populated tax returns using information from the electronic tax system.. While presented as a convenience, this effectively shifts the burden of proof: if KRA’s system says you owe tax, you must disprove it.. The Bill also introduces a draconian penalty for failing to comply with the electronic tax system – the higher of twice the tax due or Sh100,000 (Sh10,000 for individuals).. For a small
shopkeeper whose electronic invoice system malfunctions, that could mean financial ruin.. The Bill repeals and replaces the old anti‑avoidance rules with a vastly expanded general anti‑avoidance rule that gives the Commissioner power to re‑characterise any transaction if its “main purpose” was to obtain a tax benefit.. The new rule removes previous safeguards and grants a five‑year look‑back period with no upper limit – meaning KRA can re‑open virtually any transaction dating back half a decade..
Bowmans notes this “would significantly increase the risk of tax disputes and retrospective adjustments.” The Bill also tightens filing deadlines dramatically.. The income tax return deadline is cut from six months to four months after the end of the year of income, and nil returns must be filed within just one month.. Legal experts warn this “significantly reduced timeline” will lead to higher compliance costs and more penalties for late filing.. The requirement for a
PIN (Personal Identification Number) for almost all transactions is reinforced, though non‑resident persons opening accounts with investment banks are exempted.. The Bill imposes a new final tax on non‑resident rental income – rent earned by foreigners from Kenyan property – at the rate of 30 per cent.. Landlords will likely pass this cost to tenants in the form of higher rents.. The government has also expanded the definition of “management or professional fee” to include
interchange fees and merchant service fees, ensuring that even small digital payments are caught in the withholding tax net.. The Bill removes the previous exemption from excise duty for glass bottles used for pharmaceutical products, potentially raising the cost of medicines.. On a slightly positive note, the road maintenance levy on petrol and diesel has been halved from Sh3 to Sh1.50 per litre a rare relief.. A 50‑litre fill‑up saves Sh75.. The Bill also extends
the tax amnesty for penalties and interest on unpaid principal tax to December 3, 2025, and for the remaining balance to December 31, 2026 a second chance for defaulters, but not for ordinary wage earners who pay through Pay As You Earn.. The Bill is sponsored by Kimani Kuria, Chairperson of the Finance Committee.. Treasury officials argue that the Iran‑war‑driven fuel price surge has widened the fiscal deficit, and Kenya must raise domestic revenue.. Most
measures take effect on July 1, 2026, though the phone duty begins January 1, 2027.. But for the Gen Z protesters who risked bullets two years ago, the message, they say, is their cries have gone unheeded.. “We are not the same people who protested in 2024.. We are worse off,” said Ian, the 23‑year‑old university student and protest organiser during the 2024 unrest.. “They think we are tired.. They are wrong.”
Finance Bill 2026, Kenya Revenue Authority powers, Gen Z protests, taxes on phones, bottled water excise, betting withholding tax, inflation Kenya