Contentious Finance Bill sparks criticism

Kenya's Parliament has opened the Finance Bill 2026 for public participation, setting the stage for national debate over proposed tax changes touching on mobile phones, second-hand clothing (popularly known as mitumba) imports, digital platforms and cryptocurrency transactions. The proposed legislation seeks amendments to several tax laws, including the Income Tax Act, the Excise Duty Act and the Road Maintenance Levy Act. Capital FM notes the public participation process comes against the backdrop of the controversial Finance Bill 2024, which sparked nationwide Gen Z-led protests over proposed tax increases, forcing President William Ruto to decline assent to the Bill. The new process ushers in the most politically sensitive phase of the Finance Bill process, with several proposals already triggering criticism online and raising concerns among traders, digital rights groups and business associations. Among the most contentious proposals is the introduction of a deemed profit tax model targeting imported second-hand clothes. Under the proposal, 5% of the customs value of imported mitumba goods would automatically be treated as taxable income at the point of importation. Traders fear the measure could sharply increase the price of second-hand clothing, which remains a critical source of affordable apparel for millions of low-income households.

The Bill has also drawn backlash over a proposal to introduce a 25% excise duty on mobile phones for cellular and wireless networks, a move critics say could push smartphones further out of reach for many Kenyans and slow digital inclusion. The proposed law also expands taxation linked to proprietary digital platforms, software usage and electronic payment systems, signalling increased scrutiny of Kenya’s growing digital commerce sector. Capital FM says in a major policy shift, the Bill introduces provisions regulating virtual assets and virtual asset service providers, paving the way for tighter oversight of cryptocurrency transactions and digital finance platforms.

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