How Finance Bill 2026’s Tax Proposals Will Affect Your Money

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 and fruit juice processors. 

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 for those filing nil returns.

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

Also Read: How to File KRA Tax Returns Through WhatsApp

Here are some of the Major Proposals in the Finance Bill 2026 and their effect on your Money

Filing of tax returns 

The proposed change in the Finance Bill 2026 to move the tax return filing deadline from June 30 to April 30 (and January 31 for nil returns) mainly affects taxpayers’ compliance behavior. 

The April deadline reduces the time available for financial planning, correcting records, and managing cash flow, meaning taxes may be paid sooner and with less opportunity for optimization. 

This may slightly strain liquidity for businesses and individuals who rely on the extra months to organize their finances.

For nil return filers, the shorter deadline significantly increases the risk of non-compliance. Since nil filers often have no immediate financial incentive to file early, moving the deadline to January, just one month after year-end, raises the likelihood of forgetting, which could lead to penalties.

From the perspective of the KRA, the change improves cash flow and efficiency, especially in the ongoing reforms aimed at ending fraudulent nil returns. 

Tax on the importation of mitumba

The Finance Bill 2026 introduces a presumptive tax on mitumba imports, where profit is deemed at 5% of the customs value and taxed upfront by KRA, even before the goods are released. 

For instance, if you import a bale worth Ksh1 million. You pay an upfront tax of Ksh50,000. This tax is final. You cannot deduct expenses or adjust based on actual profits. Even traders making losses must still pay the tax. 

If the proposal passes, it is likely to raise mitumba prices as businesses pass the additional cost to consumers.

Tax on Crypto Profits

The Finance Bill 2026 introduces stricter reporting rules for crypto activity by requiring virtual asset service providers to submit annual returns detailing users’ transactions. 

This gives KRA greater visibility into trading, transfers, and holdings, making it harder for individuals to underreport or omit crypto income. 

As a result, taxpayers dealing in crypto will need to maintain proper records and declare gains more accurately.

The proposal also allows Kenya to enter international data-sharing agreements, meaning crypto activity conducted on foreign platforms may still be reported back to KRA.

This significantly reduces the ability to hide assets offshore and improves compliance in the crypto industry. 

‍Excise Duty on vintage vehicles, fruit juice and phones

The Finance Bill 2026 proposes new excise duties targeting luxury goods and everyday consumables, which will likely raise prices for consumers. 

Vintage vehicles valued above Ksh10 million and at least 30 years old will attract a steep 50% excise duty, making classic car ownership significantly more expensive and limiting imports to high-net-worth buyers. 

There is also proposed 25% excise duty on mobile phones used in cellular and wireless networks. This will directly increase the cost of smartphones and could result in slower replacement rates. 

On consumables, the introduction of excise duty on fruit and vegetable juices; Ksh20 per litre for sweetened juices and Ksh14.14 per litre for unsweetened varieties will likely push up retail prices. This could reduce consumption or shift demand toward cheaper or informal alternatives.

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 new VAT exemptions could lower costs and encourage investments in some sectors of the economy. Removing VAT on electric buses and bicycles is likely to make clean transport more affordable and encourage adoption in the public transport sector. 

Exempting mobile phones may offset the earlier excise duty on smartphones and stabilise prices. 

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.

If the proposals pass, it could reduce the cost of production for farmers and potentially lower the cost of healthcare. 

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.

This means if your employer is saving for your retirement through gratuity, the Finance Bill 2026 could accelerate your retirement fund. 

If your job runs for at least 3 continuous years, and your employer contributes no more than 31% of your basic salary, that money will now grow tax-free.

That would mean:

• More money stays in your pocket long-term
• Your retirement fund grows faster without deductions

However, if your contract is shorter than 3 years, or contributions go beyond the 31% limit; the extra amount will get taxed.

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.”

Other Taxes

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%.

The proposal makes the country more attractive to foreign investors by lowering the cost of doing business and improving after-tax returns. It also positions KRA to raise more money from revenues even when the profits are moved out of the country.

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.