The National Treasury has defended the Finance Bill 2026, dismissing claims that it contains punitive or hidden tax measures, while clarifying key proposals that have sparked public debate.
The National Treasury Cabinet Secretary (CS) John Mbadi said that public participation remained central to the legislative process, noting that discussions around the Bill were part of constitutional requirements.
He said, “Public participation and sectoral engagement on fiscal policy matters are part of the constitutional legislative process,” adding that recent commentary had at times misrepresented the contents of the Bill.
Mbadi said some media reports and public discussions had mixed the Finance Bill 2026 with earlier or withdrawn proposals, leading to what he termed inaccurate interpretations.
The National Treasury has defended the Finance Bill 2026, dismissing claims that it contains punitive or hidden tax measures, while clarifying key proposals that have sparked public debate.
“The Bill does not include Value Added Tax on bread, a motor vehicle circulation tax, eco-levy provisions or government access to mobile money transaction data,” he said.
On mobile phone taxation, the CS said the current framework attracts multiple levies, including VAT, excise duty, import duty, import declaration fees and railway development levy, which cumulatively amount to about 55.5 per cent.
The Cabinet Secretary said the Bill proposes to consolidate the multiple charges into a single 25 per cent excise duty to be applied at the point of activation of mobile phones.
He said, “The proposal seeks to simplify the existing structure by replacing multiple taxes with a single 25 per cent excise duty on mobile phones,” adding that the reform is aimed at streamlining tax administration and reducing complexity in the supply chain.
He further explained that under the proposed framework, several existing levies would be removed, including import duty, VAT, the import declaration fee and the railway development levy on mobile phones.
On digital finance, Mbadi said the Bill introduces a reporting framework for virtual asset service providers through amendments to the Tax Procedures Act, aimed at bringing digital assets into the formal tax system.
Mbadi said the move is intended to align emerging digital transactions with traditional financial reporting standards to ensure tax equity across sectors.
On digital payment systems and card transactions, Mbadi explained that the Bill seeks to clarify the tax treatment of fees charged by payment platforms and card providers, following recent court rulings that created ambiguity in the taxation of interchange fees and related services.
He said the clarification is aimed at ensuring consistent application of tax laws on digital payment processing services.
The Cabinet Secretary also dismissed claims that the Bill introduces a five per cent withholding tax on digital content monetisation, saying the provision is not part of the Finance Bill 2026.
He further clarified that Safaricom and similar mobile money operators are not targeted under the proposed changes, noting that the focus is on digital intermediaries and service providers.
Mbadi said the reforms are guided by principles of fairness, equity and simplicity, aimed at broadening the tax base while supporting economic stability.
The Cabinet Secretary urged continued public participation in the legislative process, saying stakeholders would still be engaged before final consideration of the Bill in Parliament.
By Lilian Gichohi and Nancy Omondi
