The National Assembly will this afternoon vote on the Finance Bill, 2026.
The vote, sets a showdown among Members of Parliament over proposals that would tighten tax enforcement and expand the Kenya Revenue Authority's powers despite avoiding the broad tax increases seen in previous years.
The vote comes exactly one week after Treasury Cabinet Secretary John Mbadi presented a Sh4.8 trillion budget for the 2026/27 financial year.
The bill passed its second reading on Wednesday, June 17.
Unlike the Finance Bill, 2024, which sparked widespread opposition over new taxes, the 2026 bill focuses on improving tax compliance, increasing revenue collection and tightening oversight of digital and financial transactions.
During the voting on the Finance Bill, 2024, 319 Members of Parliament took part in the crucial second reading.
Of those, 204 voted in support while 115 opposed the bill. No MPs abstained and 30 were absent during the division.
At the third reading of the same bill, 304 MPs cast their final votes, with 195 supporting it, 106 rejecting it and three votes recorded as spoiled before the bill was later withdrawn following political and public pressure.
Among the proposals in the 2026 bill is the reinstatement of the residential rental income tax rate to 10 per cent of gross receipts from 7.5 per cent.
The bill also seeks to expand withholding tax to cover some card transaction fees and extend value-added tax to digital financial services, including payment gateways and money transfer platforms.
The proposed law would require Virtual Asset Service Providers to submit annual user reports to tax authorities and apply capital gains tax to some offshore share transfers linked to Kenyan assets.
The bill further seeks to shorten the deadline for filing income tax returns from six months to four months after the end of a financial year, effectively moving the annual filing deadline from June 30 to April 30.
In another proposal likely to attract debate, the Kenya Revenue Authority would gain powers to issue agency recovery notices even when a taxpayer has lodged an objection or appeal against an assessment.
The legislation also proposes shifting the collection point for the 25 per cent excise duty on mobile phones from importation to local SIM card activation.
It would remove Import Declaration Fee and Railway Development Levy exemptions on imported mobile phones and introduce a 5 per cent excise duty on coal and a 50 per cent excise duty on classic motor vehicles.
However, the bill contains relief measures, including a tax amnesty on penalties and interest accrued up to December 31, 2025, provided taxpayers pay the principal tax by December 31, 2026.
It also proposes capital gains tax and stamp duty exemptions for property transfers into Real Estate Investment Trusts.
