By KPC Ongaga Ongaga
The National Treasury has moved to dispel confusion surrounding the Finance Bill, 2026, issuing clarifications on several tax measures that have sparked heated public debate.
In a press release, Treasury officials emphasized that recent commentary had “mixed proposals contained in the current Finance Bill with past proposals and interpretations that do not accurately reflect the contents and intent of the Finance Bill, 2026.”
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One of the most contentious issues has been the proposed 25% excise duty on mobile phones.
The Treasury stressed that this is not a new tax, noting that mobile phones already attract multiple levies during importation.
“Mobile phones are currently subject to 16% VAT, 10% excise duty, 25% import duty, 2.5% Import Declaration Fee, and 2% Railway Development Levy,” the statement signed by the Cabinet Secretary for the National Treasury, John Mbadi.
The CS also outlined additional fiscal strategies, including taxing money transfers through digital platforms such as Mpesa and Pesa Pal.
“Whereas the VAT Act expressly exempts listed financial services, it does not address the VAT treatment of modern digital intermediaries,” he explained, adding that Safaricom was not among those targeted.
Another proposal involves introducing withholding tax on card transactions, including Visa payments.
“A recent court ruling pronounced that these payments do not attract withholding tax thus creating a gap in taxing income from card payments,” Mbadi noted.
He said the Finance Bill now defines such fees as taxable, closing the loophole and expanding the revenue base.
On income tax, Mbadi confirmed that a 5% reduction in PAYE is under consideration, linked to earlier discussions on exempting the first Kshs 30,000 of employment income.
“Though this did not make it to the Finance Bill, it is still being explored by the technical teams,” he said.
The Treasury reiterated its commitment to a balanced fiscal framework that supports growth, innovation, and sustainability.
“We encourage continued constructive public participation on the Finance Bill, 2026 through the ongoing parliamentary process,” Mbadi concluded.
