Finance Act 2026 takes effect: The tax changes now shaping Kenyans and businesses

The Finance Act 2026 is not a single tax increase waiting on the horizon.

Most of its provisions took effect on July 1, 2026, while other measures are staggered to September 1, 2026 and January 1, 2027.

The law amended the Income Tax Act, VAT Act, Excise Duty Act, Tax Procedures Act and several other statutes.

For ordinary taxpayers, some of the most visible changes are appearing in prices, payment systems and compliance deadlines.

The biggest consumer changes

Bottled water is no longer subject to excise duty.

KRA says the charge was removed from water manufactured or imported from July 1, 2026, meaning the products no longer require excise stamps under the amended rules.

Fruit and vegetable juices were split into different tax categories.

Juice without added sugar or sweetener attracts Sh14.14 per litre, while juice containing added sugar or sweetener attracts Sh20 per litre.

Specified imported sugar attracts Sh40 per kilogramme, subject to exclusions contained in the law.

Antique, vintage and classic vehicles meeting the statutory conditions face excise duty of 50% of excisable value.

Betting and gaming also changed.

Excise duty is now charged at 5% on money deposited into betting and gaming wallets, rather than being calculated on the amount wagered under the previous structure.

Digital payments enter the tax net

The law also reaches deeper into Kenya’s digital economy.

KRA says interchange fees and merchant-service fees arising from card transactions are now treated as management or professional fees for withholding-tax purposes.

The Finance Act also expands the definition of royalties to cover certain digital-platform and payment-network arrangements.

Separately, some digital-payment services previously treated as exempt financial services are now outside that exemption where they involve activities such as payment processing, settlement, merchant acquiring, gateways and aggregation.

The impact is more likely to appear first in how businesses structure, price and report transactions than as a tax line that consumers immediately see on a receipt.

April 30 becomes the deadline

One of the most important changes for individuals arrives in 2027.

From January 1, 2027, individual income-tax returns will be due by the last day of the fourth month after the end of the year of income.

For individuals using the calendar year, that means April 30, replacing the long-standing June 30 deadline.

KRA is also allowed to issue pre-populated tax returns using information already available to it, although taxpayers retain the responsibility to review and amend the information before submitting the return.

The tax-amnesty clock

Another deadline is already running.

The Finance Act introduced an amnesty covering qualifying penalties, interest and fines on tax liabilities accrued up to December 31, 2025.

To qualify, taxpayers with outstanding principal tax must settle it by December 31, 2026, subject to the statutory conditions.

The amnesty does not wipe out the principal tax itself.

For importers, another requirement began on September 1.

Export documentation from the country of origin must be obtained and retained to support Kenyan imports, with records generally kept for five years.

The Finance Act therefore reaches far beyond a list of new taxes.

It is also changing when Kenyans file, how businesses document transactions and how KRA obtains and checks taxpayer information.