Treasury Cabinet Secretary John Mbadi has submitted the Finance Bill 2026 to Parliament, introducing comprehensive taxes impacting the second-hand clothing sector, mobile phone imports, and gambling activities.
The bill proposes increased excise duties on mobile phones and communication devices, with smartphones attracting a 25 percent levy.
This change will increase the cost of imported phones, as the excise duty will now apply upon phone activation rather than at import or purchase.
Regarding the clothing industry, the government has introduced significant changes targeting the mitumba sector with a new tax on used clothing, footwear, and other second-hand imports.
The legislation implements a deemed profit method where five percent of the customs value of imported mitumba goods will be considered taxable income, payable upon import.
This indicates that the new law will shift the tax burden to a direct income-based tax for traders.
“Notwithstanding any other provision of this Act, a tax shall be payable by a person in respect of income derived from the importation into Kenya of worn clothing, worn footwear, and other worn articles classified under tariff heading 6309,” the bill states.
In the betting sector, gamblers will face stricter taxation, with winnings subject to a 20 percent withholding tax.
Additionally, the definition of taxable deposits in betting accounts has been broadened to include all funds intended for gambling.
This expansion treats all money deposited for gambling as taxable, rather than just specific account credits or defined transactions, thereby increasing the scope of taxable betting funds.
Furthermore, companies managing digital payments, financial technology systems, card networks, and digital platforms will now fall under expanded royalty definitions, resulting in more transactions and service fees being taxed.
The government is also planning international agreements for the automatic sharing of cryptocurrency-related tax information on virtual asset transactions.
To support environmental protection and address climate change, the Treasury has proposed a 10 percent tax adjustment on plastic products, 5 percent on coal, and new adjustments to alcohol, tobacco, and sugar-related products like soft drinks.
Fruit juices will now incur a per-litre excise duty ranging from Ksh14 to Ksh20 based on sugar content, while vegetable juices and similar beverages will follow a similar framework.