The government has defended the proposed Finance Bill 2026, stating that it is aimed at creating a fair, transparent and sustainable tax system while easing the burden on ordinary Kenyans and supporting economic growth.

In a press statement on Tuesday, May 26, 2026, Government Spokesperson Isaac Mwaura said the Bill seeks to streamline taxation, close loopholes and raise resources needed to fund key public services including healthcare, education, infrastructure and security.

Mwaura said the government remains committed to ensuring citizen views are considered during the ongoing parliamentary process.

“The Finance Bill, 2026 introduces several progressive reforms designed to support households, businesses and key sectors of the economy,” he said.

Mwaura accused critics of spreading false information about the proposed tax measures.

“The ongoing misinformation campaign being spread by some individuals is creating unnecessary panic among Kenyans,” Mwaura said.

Mwaura stated that the bill introduces several progressive reforms designed to support households, businesses and key sectors of the economy.

Key areas defended by govt

Among the key proposals thta the government highlighted are incentives aimed at promoting affordable housing and investment.

According to Mwaura, the Bill retains tax relief on mortgage interest and exempts property transfers into Real Estate Investment Trusts (REITs) from Capital Gains Tax to encourage large-scale housing developments.

The government also proposed a full tax exemption on pension benefits paid to dependents after the death of a contributor, saying the move would strengthen social protection for affected families.

In the health sector, the Bill proposes VAT exemptions for dialyser equipment to lower the cost of treatment for patients requiring dialysis services. Agricultural inputs and raw materials for animal feeds will also enjoy VAT exemptions upon recommendation by the Ministry of Agriculture, a move expected to reduce food production costs and increase farmers’ earnings.

“Kenyans Can Bring in More Goods Tax-Free as the Bill proposes to significantly increase the duty-free allowance for returning residents from USD 300 (approximately Ksh 40,000) to USD 2,000 (approximately Ksh 260,000). This means travellers can now import more personal items such as phones, laptops, and clothing duty-free, making it easier and more affordable to bring goods into the country for personal use,” Mwaura stated.

Tax burden

Mwaura further said it contains several relief measures aimed at lowering the tax burden on households while supporting critical sectors of the economy.

“Among the proposed exemptions are VAT-free dialysis equipment to support kidney treatment services, tax exemptions on agricultural inputs and animal feed production, incentives for local pharmaceutical manufacturing, and VAT exemptions on the transportation of sugarcane from farms to factories,” he said.

 The Bill also proposes VAT exemptions on solar batteries, electric buses, electric bicycles, and bioethanol vapour stoves as part of efforts to promote clean energy adoption and environmental sustainability.