Finance Bill 2026: How New Scrap Metal Tax Could Help Curb Infrastructure Vandalism
By Francis Muli, June 1, 2026The Finance Bill 2026 proposes changes to how income earned from the sale of scrap metal is taxed, with the government saying the move will simplify tax compliance for dealers while helping tackle the growing problem of infrastructure vandalism.
In the Bill, a final withholding tax of 1.5 per cent will be applied to income from the sale of scrap metal.
This means that when a scrap metal dealer sells scrap metal, 1.5 per cent of the payment will be deducted as tax before the dealer receives the money.
For example, if a dealer sells scrap metal worth Ksh100,000, the buyer will deduct Ksh1,500 and remit it directly to the government, while the dealer receives Ksh98,500.
Because it is a final withholding tax, the Ksh1,500 deducted is considered the full tax due on that income. The dealer will not be required to pay additional income tax on that particular sale or undertake further tax calculations on the same transaction.
The proposal follows requests from players in the scrap metal industry for a simpler and more predictable tax system.
According to Treasury Cabinet Secretary John Mbadi, the Finance Bill 2026 seeks to promote fairness and simplicity in taxation by ensuring that all eligible Kenyans pay their fair share of taxes.
The government says the measure will make it easier for businesses in the sector to comply with tax requirements while creating a clear record of transactions.
Beyond simplifying tax administration, the proposal is expected to improve the traceability of scrap metal across the supply chain. By ensuring transactions are properly documented, authorities will be able to track the source and movement of scrap materials more effectively.
The move comes amid rising cases of theft and vandalism targeting public infrastructure. In recent years, criminals have stolen and sold metal components from power transmission lines, railway infrastructure, road signs and water systems as scrap metal.
Such incidents have disrupted essential services and cost taxpayers billions of shillings in repairs and replacement works.
Government officials argue that improving traceability within the scrap metal trade could make it more difficult for stolen materials to enter the market. Better records of who sells scrap metal and where it originates could help law enforcement agencies identify suspicious transactions and hold offenders accountable.
The Finance Bill also contains broader measures aimed at improving tax administration in other sectors, including changes to betting and gaming taxation to ensure consistent treatment of withdrawals and winnings across online and land-based platforms.
The proposal seeks to make tax compliance easier for scrap metal dealers while improving accountability and transparency in a sector that is important to both manufacturing and recycling.
If approved by Parliament, the proposed 1.5 per cent final withholding tax is expected to provide a simpler tax framework for scrap metal dealers while supporting efforts to protect critical public infrastructure from theft and vandalism.