Kenya Finance Bill 2026 Advances with Key Changes

Kenya’s legislative body has successfully passed the Finance Bill 2026, marking a significant legislative milestone. The bill, which cleared its third reading on June 18, 2026, received the majority backing of 122 MPs against 40 dissenting votes. It is now pending the president’s approval. This development follows intensive deliberations by the National Assembly’s Finance and National Planning Committee to amend proposed tax measures.

Key Tax Proposals Altered

The Finance Bill witnessed several crucial modifications aimed at alleviating the tax burden on vital sectors. The committee upheld zero-rated VAT for essential goods, particularly in manufacturing and agriculture, ensuring production costs remain manageable. Similarly, critical items like mobile phones, electric vehicles, and solar products retained tax exemptions, promoting digital inclusion, green mobility, and renewable energy adoption.

Impact on Technology and Digital Economy

A pivotal decision was the removal of the proposed excise duty on mobile phones, which is crucial for maintaining the affordability of smartphones. This aligns with objectives to boost digital connectivity, enable mobile money ecosystems, and enhance financial inclusion across Kenya. The 60% deemed dividend tax on retained earnings was also withdrawn to encourage corporate reinvestment and support the growth of SMEs and startups.

Moderated Tax Enforcement Measures

The bill now features a restrained approach to expanding the Kenya Revenue Authority’s automated tax assessment powers. The focus is on ensuring accuracy and strengthening taxpayer protections while preventing potential over-reliance on automated evaluations.

Virtual Asset Service Providers Under Scrutiny

The legislation maintains stringent reporting requirements for Virtual Asset Service Providers (VASPs), underscoring the importance of regulatory oversight in the digital asset sector. Despite potential compliance costs, these obligations aim to balance innovation with regulatory needs in Kenya’s evolving digital asset landscape.

Conclusion

While the legislative adjustments in the Finance Bill 2026 aim to protect consumer and business interests, the fortified regulations for digital asset providers pose ongoing challenges. The balance between fostering innovation and ensuring adequate oversight remains a pivotal consideration for Kenya’s economic policy.