NAIROBI, Kenya — President William Ruto’s administration has proposed a raft of new taxes under the Finance Bill 2026 as the government seeks to raise an additional Sh120 billion in revenue amid mounting fiscal pressure and rising public debt.
Treasury projections tabled before Parliament show the Kenya Revenue Authority (KRA) is expected to collect Sh2.985 trillion in taxes during the 2026/27 financial year, up from Sh2.784 trillion in the current fiscal cycle.
The proposed measures come against the backdrop of slowing economic growth, global market uncertainty linked to tensions involving Iran and Israel, and increased pressure on domestic revenue mobilisation.
According to Treasury documents, the government also plans to intensify its crackdown on tax evasion, supported by Sh19 billion allocated to KRA’s digital transformation programme.
Smartphones Face 25 P.c Excise Duty
Among the most contentious proposals is a planned 25 P.c excise duty on smartphones and communication devices.
Under the bill, the tax would be charged at the point of activation or first use rather than during importation or purchase, a move expected to increase the cost of mobile phones in Kenya.
“The excise duty payable in respect of telephones for cellular networks and other wireless networks shall be paid to the commissioner by the time of activation,” the bill states.
Industry analysts warn the measure could significantly affect smartphone affordability, internet access and digital inclusion, particularly among young Kenyans and low-income households.
New Tax on Mitumba Imports
The Treasury has also proposed a 5 P.c tax on imported second-hand clothes, shoes and related items commonly known as mitumba.
The tax would apply before goods are cleared at ports or border entry points, potentially increasing the cost of second-hand products widely relied upon by millions of Kenyans.
“A tax shall be payable by a person in respect of income derived from the importation into Kenya of worn clothing, worn footwear and other worn articles,” the proposal states.
Traders and consumer groups are expected to oppose the measure, arguing it could raise living costs at a time of economic strain.
Betting Sector Faces Higher Taxes
The Finance Bill further proposes a 20 P.c withholding tax on betting winnings as the government moves to tighten regulation and taxation of the gambling sector.
The proposal broadens the definition of taxable betting funds to include deposits made into gaming accounts, expanding the tax base beyond winnings alone.
The changes are expected to affect online betting firms, lottery operators and digital gaming platforms operating under the Gambling Control Act 2025.
Plastic, Coal and Sugary Drinks Targeted
The Treasury is also seeking environmental and health-related tax adjustments, including a proposed 10 P.c tax increase on plastic products and a 5 P.c adjustment on coal.
Additional excise changes target alcohol, tobacco and sugar-based beverages as part of climate and public health policy measures.
Fruit juices would attract excise duty ranging between Sh14 and Sh20 per litre depending on sugar content, with vegetable juices and similar drinks also affected.
Digital Payments and Crypto Under Scrutiny
The bill proposes broader taxation on royalties linked to digital platforms, fintech systems, payment networks and digital transactions.
Companies operating digital payment infrastructure may face expanded tax obligations under revised royalty definitions.
The government is also seeking international tax information-sharing agreements related to cryptocurrency transactions, with virtual asset service providers expected to submit annual user transaction reports.
Rising Budget Pressures
National Assembly Majority Leader Kimani Ichung’wah recently tabled budget estimates projecting total government spending at Sh4.78 trillion, equivalent to about 23 P.c of Kenya’s GDP.
To bridge the anticipated deficit, the government plans to borrow a record Sh1.1 trillion domestically.
Economists warn that while the administration is under pressure to increase revenue collection, additional taxes could deepen the cost-of-living crisis and trigger renewed public opposition similar to the nationwide protests witnessed during the Finance Bill 2024 debate.
The Finance Bill 2026 is expected to face intense parliamentary scrutiny and public debate in the coming weeks as lawmakers weigh revenue demands against growing economic hardship among households and businesses.
