Late-night drama as MPs pass Finance Bill amid strong dissent

Attempts by the Opposition to introduce amendments to some clauses of the Finance Bill 2026, which they considered controversial, fell flat as they insisted they would still reject it, arguing it was intended to hoodwink Kenyans.

Amid complaints from some MPs over the hurried passage of the Bill, the House went into a Committee of the Whole House to scrutinise it clause by clause ahead of the vote, with the Government carrying the day after pushing through its preferred amendments.

From deleting some clauses to introducing new ones and making several amendments, it was a delicate balancing act during the session that ran late into the night. 

Finance Committee Chairperson and Molo MP Kuria Kimani, alongside the Majority and Minority leaders, mounted a spirited defence of the Bill, saying it is well-intentioned and addresses key sectors of the economy, including manufacturing and agriculture.

To make the Bill more acceptable, the government is proposing amendments such as zero-rating sugar transportation, increasing tax on imported sugar and removing clauses that sought to tax mobile phones upon activation. The Bill appeared to sail through, despite pockets of opposition.

“We are introducing a new provision in the sugar belt sector, where we are now proposing an increased tax on imported sugar. The current rate is Sh7.50 per kilogramme, but after consultation, we have amended it to Sh40 per kilogramme. This would mean that all sugar-producing companies will find it easier to sell sugar locally,” he said.

But even as MPs supported the zero-rating of sugarcane transportation and other essential goods, they also called for remedies in other sectors such as tea, coffee and rice, arguing that imports are hurting local farmers who have no ready markets.

Runyenjes MP Eric Muchangi said, “I support the amendment on sugar imports, but as we look at the sugar tax, they should also remove levies imposed on tea because farmers will not earn any profits, since it is entirely meant for export.”

Leader of Majority Kimani Ichung’wah clarified that the Finance Bill 2026 has no levies on tea or coffee, saying there is a need to inform the public that the proposals mainly affect sugar farmers, most of whom have already been addressed.

He added that the Bill is drafted by the National Treasury and that the chairperson of the Finance Committee does not originate any of the proposals.

“These are proposals from the Executive, but we provide oversight and represent the people. We are making decisions in the best interest of Kenyans and it is important that Kenyans are informed that there are tax reliefs,” Ichung’wah said.

Final decision 

Leader of Minority Junet Mohamed added, “Members need to understand the powers they have. The reason we are considering this Bill is that you are the ones with the authority to amend it. Treasury can propose anything, but it is you, as representatives of the people, who make the final decision. We have been sent here by the people to protect their interests.”

Some MPs urged caution in supporting the Bill, saying legislation must be geared towards long-term economic prosperity.

They argued that when goods and services are zero-rated, the intended benefit should reach consumers, noting that the government had initially proposed removing some zero-rated items because the relief was not trickling down, while tax expenditure continued to run into hundreds of billions of shillings.

The Finance Committee Chairperson maintained that the Finance Bill 2026 is not merely a revenue-raising tool, but also a broader policy reform framework aimed at strengthening Kenya’s tax system.

“Unlike previous approaches that focused mainly on introducing new taxes, this Bill emphasises simplifying tax laws, addressing ambiguities, strengthening enforcement and aligning Kenya’s tax framework with international standards. It further reflects the government’s commitment to modernising tax administration through technology, data analytics and risk-based compliance mechanisms,” Kimani said.

With the enactment of the Finance Act, 2022, Kimani said the House approved various tax measures aimed at promoting fiscal sustainability and enhancing revenue collection.

The projected revenue from these measures stood at Sh25 billion under the Finance Act, 2022; Sh211 billion under the Finance Act, 2023; Sh344 billion under the Finance Bill, 2024, which was not enacted; Sh30 billion under the Finance Act, 2025; and Sh98.9 billion under the proposed Finance Bill, 2026.

“Through the rationalisation of tax incentives, improved compliance measures and other revenue-enhancing interventions, the government expects to raise Sh98.9 billion. These funds will support the appropriations moved by the Chairperson of the Budget and Appropriations Committee,” he said.

He added that the Bill primarily seeks to simplify tax laws, address ambiguities, strengthen enforcement and align Kenya’s tax framework with international standards, with measures including improved taxation of trusts, virtual assets, non-residents and digital transactions, alongside rationalisation of tax incentives and enhanced compliance through electronic systems.

The Committee took a firm stance against perceived tax administration overreach, recommending deletion of a proposal that would have allowed the Kenya Revenue Authority (KRA) to issue agency notices during active tax disputes, objections or court proceedings. Lawmakers said the measure would have affected cash flows, disrupted operations and undermined the right to fair administrative action.

While the Bill had proposed shorter tax-filing timelines, the Committee instead recommended more practical changes, giving individuals four months and corporations six months to file annual tax returns.

It also retained zero-rated VAT status for key commodities such as locally assembled mobile phones, electric motorcycles, bicycles, buses, solar and lithium-ion batteries, sugarcane transport and animal feed inputs, warning that reclassification would raise costs and deter investment.

Speaker Moses Wetang’ula rejected proposed amendments by three MPs, citing Article 114 on money Bills and ruled that the Bill proceed without them.

After yesterday’s vote, the bill awaits presidential assent.