Tax experts and players in the financial sector have expressed support for several proposals contained in the Finance Bill 2026, especially those seen as easing the tax pressure on individuals and businesses. However, they are also urging the government to refine certain sections to improve fairness and strengthen economic impact. During a Citizen Digital X Space discussion titled “Unpacking Finance Bill 2026” held on Thursday night, stakeholders praised the government for avoiding the introduction of new taxes, noting that many households and businesses are already under significant financial strain.
ICPAK Chairperson Elizabeth Kalunda said one of the most notable positives in the bill is that it does not increase the overall tax burden. She observed that the proposals appear less aggressive compared to previous finance bills. Kalunda also supported the introduction of pre-filled tax returns, saying it would simplify filing processes and improve efficiency in tax administration. In addition, she welcomed the proposal to exempt employers’ contributions to employee gratuity schemes from taxation, noting that it would encourage savings and strengthen retirement benefits.
However, she raised concerns about a clause requiring employees to work continuously for at least three years to qualify for tax exemptions on gratuity payouts. According to her, this rule could disadvantage workers on short-term renewable contracts who effectively serve an organisation for many years. Treasury Cabinet Secretary John Mbadi defended the proposal, arguing that safeguards are necessary to prevent abuse through tax planning. He further noted that the three-year requirement aligns with existing pension regulations that also set minimum service thresholds.
The discussion also focused on proposed changes to Pay As You Earn (PAYE). Kalunda echoed views from the Kenya Bankers Association, calling for a review of all tax brackets rather than focusing only on lower-income earners. She noted that many Kenyans support extended families, meaning any increase in disposable income would likely circulate back into the economy.
Deloitte East Africa Associate Director and Tax Policy Lead Fred Kimotho, who worked with the Kenya Bankers Association on the PAYE proposals, recommended a uniform 5 percent reduction across all tax bands. He argued that such a move would significantly boost disposable income and stimulate economic activity. Under this proposal, the top PAYE rate would reduce from 35 percent to 30 percent, with similar adjustments across other brackets. Kimotho estimated that the changes could inject approximately KSh 28.1 billion into the economy.
Kenya Bankers Association Chief Executive Raimond Molenje also supported broader tax relief, saying that across-the-board reductions would increase purchasing power, stimulate demand, and support job creation. Treasury CS John Mbadi acknowledged the concerns, agreeing that easing the tax burden has merit. However, he maintained that improving household purchasing power requires a wider set of economic measures beyond tax adjustments alone.
