NAIROBI, Kenya — Kenyans may be spared a controversial new tax on mobile phones after the National Assembly’s Finance Committee proposed deleting several disputed provisions from the Finance Bill 2026 following public criticism.
In a report tabled before Parliament on Tuesday, June 16, the committee recommended scrapping a clause that sought to introduce a 25 per cent excise duty on every mobile phone activated in Kenya.
Lawmakers said the proposal would have created significant compliance challenges, delayed revenue collection, and caused uncertainty among consumers.
“The proposed excise duty on mobile phones would present administrative and implementation difficulties and could negatively affect consumers and the digital economy,” the committee noted in its report.
Zero-Rated VAT Retained for Key Products
The committee also moved to retain zero-rated VAT status for several products that the Finance Bill had proposed to reclassify as exempt.
The affected products include:
- Locally assembled electric motorcycles
- Electric buses
- Solar batteries
- Lithium-ion batteries
- Transportation of sugarcane to factories
- Raw materials used in the manufacture of animal feeds
According to the committee, removing the tax incentives would increase production costs, discourage investment and undermine local manufacturing initiatives.
Protection of Taxpayer Rights
The lawmakers also rejected a proposal that would have allowed the Kenya Revenue Authority (KRA) to issue enforcement notices against taxpayers while appeals or court cases were still pending.
The committee argued that such a provision could undermine taxpayers’ rights, disrupt business operations, and compromise access to justice.
In addition, the committee opposed the inclusion of weekends and public holidays in the calculation of timelines for filing tax objections and appeals, warning that the change would violate principles of fairness and due process.
Tax Measures Retained
Despite recommending the removal of several contentious provisions, the committee supported a number of revenue-raising measures in the Finance Bill.
These include:
- Reintroduction of a tax amnesty programme effective July 1, 2026, allowing taxpayers to settle outstanding principal tax liabilities accrued up to December 31, 2025.
- Taxation of non-resident landlords.
- Exemption of death benefits paid to pension beneficiaries.
- A 1.5 per cent withholding tax on scrap metal transactions.
The committee said the tax amnesty proposal was informed by the success of a previous programme, which attracted more than one million applications and generated billions of shillings in revenue.
Revised Tax Filing Timelines
Lawmakers also recommended adjustments to proposed tax return filing deadlines. The Finance Bill had sought to reduce the filing period from six months to four months, but the committee proposed changes to the implementation framework.
The recommendations will now be debated by the National Assembly as MPs consider the final form of the Finance Bill 2026 before it is passed into law.
