The Government has defended the Finance Bill 2026, saying the proposed law seeks to create a fair, transparent and sustainable tax system, while easing the burden on ordinary Kenyans and supporting economic growth.
Speaking on Tuesday at the Government Media Centre at Harambee House Annex in Nairobi, Government Spokesperson Isaac Mwaura said the Bill is aimed at streamlining taxation, sealing loopholes and raising revenue for essential public services such as healthcare, education, infrastructure and security.
Mwaura said the Government had taken into account public concerns surrounding the Bill and assured Kenyans that views collected during public participation would be considered before Parliament concludes deliberations.
“The Government remains fully committed to building a fair, transparent and sustainable tax system that supports economic growth, protects citizens and strengthens national development,” said Mwaura.
He noted that the Bill contains several incentives aimed at supporting households, businesses and key sectors of the economy.
Among the proposals is continued tax relief on mortgage interest to support affordable housing and home ownership.
The Bill also proposes exemption of Capital Gains Tax on property transfers into Real Estate Investment Trusts (REITs), a move expected to encourage investment in housing and large-scale developments.
The Spokesperson further said the Government intends to protect families by introducing full tax exemption on pension benefits paid to dependents after the death of a contributor.
“This proposal ensures families receive their full entitlements without deductions, thereby strengthening social protection and financial dignity,” he said.
Mwaura added that the Bill seeks to lower the cost of essential goods and services through VAT exemptions on critical products and inputs.
He said dialyses equipment would be exempted from VAT to reduce the cost of treatment for patients requiring dialysis, while agricultural inputs and raw materials for animal feeds would also enjoy VAT exemptions to lower food production costs and improve farmers’ earnings.
Inputs used in pharmaceutical manufacturing will equally be exempt from VAT in a bid to support local medicine production under the Government’s Bottom-Up Economic Transformation Agenda (BETA).
He also highlighted proposed incentives targeting green energy and environmental sustainability.
According to Mwaura, solar and lithium-ion batteries, electric buses and bicycles, as well as bioethanol cooking solutions, will be exempted from VAT to encourage the use of affordable and clean energy alternatives.
“These measures will lower the cost of clean energy and support Kenya’s climate commitments,” he said.
The Bill also proposes VAT exemption on transportation of sugarcane to increase farmers’ returns.
In addition, the Government plans to raise the duty-free allowance for returning residents from USD 300 to USD 2,000, allowing travelers to bring in more personal goods such as phones, laptops and clothing without paying tax.
Mwaura also announced that businesses would be granted up to December 2026 to file tax returns and settle outstanding obligations without penalties under an extended tax amnesty programme.
At the same time, the Government dismissed reports circulating on social media that the Finance Bill will introduce new taxes on smartphones, bread, mitumba clothes and mobile money transactions.
Mwaura clarified that the proposed changes on smartphones are meant to simplify taxation by replacing several existing charges with a single excise duty.
“Currently, mobile phones attract a combined tax burden of approximately 55.5 per cent. The proposed framework simplifies this to a single 25 per cent excise duty intended to make taxation more predictable and eventually lower phone prices,” he explained.
He added that the Bill does not impose VAT on bread or any new tax on second-hand clothes.
The spokesperson further dismissed claims that the Bill introduces a five per cent withholding tax on digital content monetization or additional taxes on mobile money transactions.
“The Bill only seeks to clarify taxation for digital platforms and payment systems to ensure fairness and consistency in the digital economy,” he said.
Mwaura also assured Kenyans that the proposed law does not grant tax authorities access to personal mobile money data, noting that existing data protection laws remain in force.
Meanwhile, the Government expressed concern over rising cases of child abductions and violence against children across the country.
Mwaura revealed that between January 2025 and March 2026, the Child Protection Information Management System recorded 10,581 child protection cases, including 1,952 abductions, 1,636 missing children cases and 173 trafficking incidents.
“The Government unequivocally condemns these heinous acts involving the abduction, murder and abuse of children, which undermine the safety and well-being of our communities,” he said.
He said the Government had strengthened interventions through rescue operations, family tracing, reintegration programmes and judicial action, while Children Advisory Committees had been established across counties and sub-counties in line with the Children Act 2022.
Parents were urged to educate children against accepting gifts or lifts from strangers and to encourage them to walk in groups while travelling to and from school.
The Government also called on members of the public to report cases of missing children, abuse, neglect, trafficking and online exploitation through the National Child Helpline 116, WhatsApp line 0722 116 116, police stations and Children’s Offices.
by Anita Kariuki
