Key Tax Proposals in Finance Bill 2026 

The Finance Bill 2026 has been published, ahead of its tabling in Parliament by National Assembly Finance Committee Chairperson Kimani Kuria.

The Bill outlines the tax measures the government plans to implement from July 2026, including new proposals targeting mitumba traders, fruit juice processors, and scrap metal dealers.

Among the standout changes is a revision of tax filing timelines. The proposal seeks to set April 30 as the deadline for individuals with income, and January 31 for those filing Nil returns.

Currently, taxpayers are required to file returns by June 30.

Here are the key tax proposals contained in the Bill:

Also Read: How to File KRA Tax Returns Through WhatsApp

Filing of tax returns 

Under the Finance Bill 2026, tax returns will have to be filed by the last day of the fourth month (April 30).

Those filing Nil returns will be required to submit their returns by January 31. Currently, both categories of taxpayers are required to file their returns by June 30.

Tax on the importation of mitumba

The Finance Bill 2026 proposes a new tax on income earned from the importation of mitumba. Under the proposal, taxable profit will be deemed at 5% of the customs value of the goods.

“The tax payable under this section shall be due and payable upon importation and prior to the release of the goods and shall be a final tax in respect of the income,” read the Finance Bill in part.

Withholding Tax on scrap metals

Scrap dealers will also be affected as the Bill proposed a 1.5% Withholding Tax on the sale of scrap metals.

The Finance Bill 2026 also proposes a 20% Withholding Tax on winnings from gambling.

Excise Duty on vintage vehicles, fruit juice and phones

Another significant proposal in the Finance Bill 2026 proposed the introduction of Excise Duty for motor vehicles worth above Ksh10 million, whose year of first registration is at least thirty years before the date of purchase of the motor vehicle.

The Bill proposes a rate of 50% of the excisable value.

The Bill proposes a 25% excise duty on telephones used in cellular and wireless networks.

It also introduces new excise taxes on fruit and vegetable juices. Juices containing sugar or other sweetening matter will attract an excise duty of Ksh20 per litre, while those without any added spirit will be taxed at Ksh14.14 per litre.

Also Read: PAYE Cut Proposals Dropped in Finance Bill 2026 

VAT Exemption Proposals 

The Bill also proposes VAT exemptions on a range of items and services, including the supply of electric buses and bicycles, alongside imported or locally purchased telephones for cellular and wireless networks.

The Finance Bill 2026 also proposed VAT exemptions for human and animal blood, dialysers, scrap metal, as well as raw materials used in the manufacture of animal feeds and pharmaceutical products.

Equally, goods and services designated for exclusive use in infrastructure projects being implemented in Public-Private Partnership (PPP) will qualify for VAT exemption.

Non-Resident Rental Income Tax 

For foreigners who earn income from the use or occupation of property in Kenya, the Finance Bill proposes the introduction of a Non-Resident Rental Income Tax.

The tax will be a final levy, charged at a rate to be specified in the Third Schedule. Currently, rental income tax stands at 7.5 per cent.

“A non-resident person subject to the tax payable under subsection (1) shall register and account for the tax through a simplified registration framework prescribed by the Commissioner; and submit a return and pay the tax due on or before the 20th day of the month following the end of the month for which the rent is paid,” read the proposal in part.

Also Read: 3 New Laws and Taxes That Will Affect Your Money in 2026

Tax exemption for an employee's gratuity payment 

For employees, contributions to a gratuity are exempt from tax if the contract is for at least three continuous years and total contributions do not exceed 31% of the basic salary.

Taxation on income from Trusts

The Bill also proposes that income received by a trustee, executor, or administrator be treated as their own for tax purposes. Once tax is paid at the trust level, beneficiaries will not be subject to any further tax on that income.

“Dividend or interest which is included in the income of the trustee, executor or administrator under subsection shall not be subject to further tax under this Act,” proposed the Bill in part.

“Where a trustee, executor or administrator has paid tax on the chargeable income of the trust, a beneficiary of the trust shall not be liable to pay tax on that income.”

Corporate Tax

The Bill also reduces the rate of Corporate Tax for foreign companies from 37.5% to 30%.

“The Ninth Schedule to the Income Tax Act is amended in paragraph 7 in subparagraph (3), by deleting the words “thirty-seven and a half per cent” appearing in item (b) immediately after the words “non-resident company” and substituting therefor the words “thirty per cent”,” read the Bill in part.

The non-resident tax rates for repatriated income by a contractor shall also be 15%.

Reporting by crypto platforms 

Under the new proposal, virtual asset service providers that facilitate exchanges or operate trading platforms will be required to file annual information returns detailing their users’ activities.

The Bill also allows Kenya to enter into international agreements to enable the automatic exchange of data on virtual asset transactions.