Kenyan parliament clears the Finance Bill 2026, heads to Ruto for assent

On 18 June 2026, the National Assembly of Kenya approved the Finance Bill 2026 for President William Ruto's assent, with a vote of 122–40. 

The passing of the Finance Bill 2026 experienced pushback from members of Parliament, with  187 of 349 MPs absent from the final stage, leading opposition leaders to question the legitimacy of the process.

Despite the absence and the opposition’s blowback, the bill was finally signed and passed into law by the President on 23 June. The president signed the bill as it is a necessary step toward fiscal stability, framing it as a tax system that protects the vulnerable, rewards enterprise, and promotes compliance. 

For forex traders, Kenya's Finance Act 2026 breaks down how the government intends to generate revenue, control expenses, and maintain investor confidence in the 2026/27 financial year.

What are the key provisions of Kenya's Finance Bill 2026?

In the newly signed Act, several provisions now carry the force of law and will shape business costs, compliance obligations, and investment conditions in Kenya. 

These provisions include: 

Digital payments and withholding tax expansion

The Act expands the definition of royalties to include fees paid to payment network service providers for the use of their platforms to process and settle transactions. 

This provision of the Act now brings digital financial infrastructure, such as card schemes, payment gateways, and merchant acquisition services, within the scope of withholding tax. 

The Act removes VAT exemptions on payment processing, merchant acquiring, gateway, and aggregation services, making these services taxable.

The implication of this provision is that businesses that rely on digital payment infrastructure now face higher compliance costs, which may be passed on to consumers and merchants. 

Extension of tax amnesty

The Act introduces a six-month tax amnesty. This provision allows taxpayers who settle outstanding tax liabilities incurred from periods up to 31 December 2025 by 31 December 2026 to have all associated penalties and interest waived. 

This provision gives businesses with legacy tax exposure a window to regularize their position without the burden of accumulated penalties. 

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Expansion of the Kenya Revenue Authority's power to enforce

The Act now strengthens the Kenya Revenue Authority's (KRA) enforcement powers. The KRA can now effect the recovery of statutory fees, levies, and charges as if they were unpaid taxes. This new role expands its authority beyond tax liabilities. 

The Act empowers the KRA to disregard any scheme that seeks to obtain a tax benefit. It removes a statutory protection that prevented the KRA from issuing agency notices to taxpayers with appeals before the Tax Appeals Tribunal or the courts. 

However, this provision has been argued to give the KRA the leverage to threaten taxpayers' rights during litigation.

Investment incentives

Another notable provision of the Act is the removal of capital gains tax and stamp duty on the transfer of property into Real Estate Investment Trusts. The provision aims to increase participation in Kenya's listed real estate market. 

The Act also reduces the corporate tax rate for non-resident petroleum contractors from 37.5% to 30% to ensure more participation in the oil and gas sector.  

The Act goes further to exempt Public-Private Partnership infrastructure projects from VAT. This may help reduce the cost of large-scale development projects in roads, energy, and water systems.

Kenya’s domestic reforms will also be assessed against broader global currency conditions, including whether the US dollar remains strong or begins to weaken.

How has the Finance Act 2026 been challenged? 

A petition has been filed by the Consumers Federation of Kenya (COFEK) in the Constitutional and Human Rights Division of the High Court seeking to have the provisions suspended for the time being. 

COFEK argues that the contested provisions raise concerns under Articles 31 and 201 of the Constitution and the Data Protection Act, citing issues around privacy protection, public participation, and the equitable distribution of tax burdens.

They believe that expanding the definitions of royalty and management fee to include digital payment infrastructure amounts to a hidden tax on every digital transaction. 

COFEK argues that removing VAT exemptions on selected goods and services could make affected items more expensive, with no framework in place to protect low-income households.

COFEK  believes that the provisions requiring virtual asset service providers to share user and transaction data with the KRA raise questions regarding users' right to privacy and the provisions of the Data Protection Act. 

While the COFEK petition has introduced meaningful legal uncertainty, the Treasury, KRA, and Parliament have not responded. The President has, however, moved to give his assent and signed the bill into law.

How does the Finance Act 2026 affect the shilling and forex traders? 

The shilling and investor appetite tend to reflect Kenya's fiscal position. If the Act delivers a meaningful improvement in revenue collection, it may strengthen the shilling's stability.

The successful implementation of the Act may also improve fiscal credibility, support sovereign credit ratings, reduce borrowing costs, and attract foreign portfolio inflows into government securities, which could increase demand for the local currency. 

The compliance costs imposed by the Act, especially in the digital and financial services sectors, may slow consumption and business activity in the short term. The additional tax obligations could affect corporate earnings and investor sentiment in the near term.

The COFEK petition adds another angle, as there are uncertainties regarding the suspension of certain provisions until the High Court rules. 

Traders could monitor how the authorities work toward ensuring that the provisions of the Act are implemented in the near term. 

Conclusion

Kenya's economic growth is slowly improving, and if additional cost pressures from new tax measures complicate the CBK's monetary policy, they may weigh on the pace of economic recovery.  

For forex traders, the implementation of the Act over the coming months could reinforce Kenya's macroeconomic stability and ensure continued interest in Kenyan assets. The CBK's response and the progress of the COFEK petition are important factors to monitor as the financial year unfolds. 

For more information on the implementation of the Act, visit Exness Insights. Forex traders can find more information about Kenya’s economic outlook on the Exness Blog page.