National Treasury Cabinet Secretary John Mbadi has submitted the much-awaited Finance Bill 2026 to Parliament. The bill introduces a range of Kenya tax that affect, among other areas, the second-hand clothing industry, the importation of mobile phones, and gambling activities.
According to the bill reviewed by Kenyans.co.ke, the government proposes a higher excise duty on mobile phones and communication devices. Under the changes, smartphones and related devices are set to attract a 25% excise duty. This is expected to increase the cost of imported phones. The bill states that excise duty would be charged when a phone is activated, rather than at the point of import or purchase.
In the clothing sector, the bill proposes significant changes to the mitumba (second-hand clothing) industry, including a new tax on worn clothing, footwear, and other second-hand imports. The bill also introduces a deemed profit approach. Under this model, 5% of the customs value of imported mitumba goods would be treated as taxable income, payable at the time of importation.
In effect, this shifts the tax burden away from traditional import duties and VAT and toward a direct income-based tax on traders. The bill states, in part: “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.”
For the betting industry, the bill proposes tougher taxation. Winnings are set to be subject to a 20% withholding tax. It also expands the definition of taxable deposits in betting accounts to cover all funds used for gambling purposes. This broadens the tax base by treating all deposited gambling funds as taxable, rather than only specific account credits or clearly defined transactions.
In addition, the bill expands the definitions of royalties for companies operating digital payments and financial technology systems, card networks, and digital platforms. This means more transactions and service fees could fall under tax. Virtual asset service providers will also be required to submit detailed annual reports on user transactions. The government is further planning international agreements for the automatic sharing of crypto-related tax information.
Finally, the National Treasury proposes a set of measures aimed at environmental protection and ongoing climate change policy discussions. These include a 10% tax adjustment on plastic products and a 5% tax adjustment on coal, along with new adjustments for alcohol, tobacco, and sugar-related products such as soft drinks.
Fruit juices are expected to attract an excise duty of between Ksh14 and Ksh20 per liter, depending on sugar content, while vegetable juices and similar beverages will be brought under a comparable framework.
