NAIROBI, Kenya — The Consumers Federation of Kenya (COFEK) has moved to the High Court in Milimani seeking to block the implementation of several provisions contained in the Finance Bill, 2026, arguing that the proposed tax measures could harm consumers and violate constitutional safeguards.
In a petition filed at the High Court, COFEK is seeking conservatory orders to suspend the enactment and enforcement of the contested provisions until the court determines whether they comply with constitutional requirements on taxation, public participation, privacy, and fair administrative action.
The consumer lobby argues that Parliament is at an advanced stage of processing tax proposals that could significantly alter how Kenyans are taxed on everyday transactions without sufficient protections for taxpayers.
COFEK says that allowing the measures to take effect before the court reviews their legality could result in immediate financial consequences that may be difficult to reverse.
The petition specifically challenges proposed taxes affecting digital payments, scrap metal transactions, and virtual assets, alongside plans to remove certain VAT exemptions and zero-rated supplies.
Digital payments and consumer costs
COFEK argues that expanding tax obligations around payment systems, card networks, and financial technology platforms could increase operational costs for banks, fintech companies, and payment service providers.
According to the federation, those costs are likely to be transferred to consumers through higher transaction charges and increased merchant fees.
The petition raises concerns that the proposals could affect Kenya’s growing digital economy, where mobile money and electronic payment platforms have become central to daily commercial activity.
COFEK argues that taxation policies affecting digital transactions must balance government revenue needs with consumer affordability, financial inclusion, and data protection concerns.
Scrap metal tax criticised
The lobby has also challenged a proposed 1.5pc withholding tax on gross proceeds from scrap metal transactions.
COFEK argues that taxing gross turnover rather than actual income could unfairly affect small-scale operators whose profit margins are already limited.
The federation says the measure could disproportionately impact young people, waste collectors, and small traders who depend on scrap metal businesses for their livelihoods.
It has urged the court to consider the broader economic effects of the proposal on vulnerable groups involved in the sector.
VAT changes raise cost concerns
COFEK has further raised objections to the proposed removal of VAT exemptions and zero-rating for certain goods and services, including basic food items, healthcare products, agricultural inputs, and educational materials.
The organisation argues that moving these products to the standard 16pc VAT rate would increase production and distribution costs, ultimately raising prices for households.
It faults the Finance Bill for lacking clear transition measures and targeted consumer protection mechanisms to cushion Kenyans from possible price increases.
COFEK is asking the court to preserve the current position until it determines whether the disputed provisions meet constitutional standards.
