Description
HON Mark Mwenje REJECTS Finance Bill 2026
Budget 2026
[00:00] The commissioner can pinpoint a phone to an individual and even shut it down, especially our Gen Z's—they're the ones on cell phones a lot. Some of these taxes that you're putting here are going to directly affect the very cost of building those houses, the cost of building classrooms in Nairobi. It means you can challenge KRA, but they will still go get your money in the meantime—then what is the point of challenging anyway? I cannot vote for a finance bill that is going to make a company that is in my constituency, in one of my wards, employing over a thousand people, to close down and take those jobs to Uganda.
[00:42] Good morning, this is Mark Mwenje, MP Embakasi West, and today I want to talk about the finance bill which is coming up—might be coming up today, tomorrow, but it's definitely coming up. I have already gone on the record that I have some issues with some of the provisions provided within the 2026 finance bill, and I'm just going to highlight a few of these issues that are going to affect you.
[01:11] Now, one of the things that I have a problem with is Section 35 of the finance bill, which puts excise duty on cell phones. The difference with this provision is that the excise duty before was applying at the point of importation—you could import 50 cell phones and you pay duty at that time. Now, you pay it at the point of activation.
[02:38] Then, Section 45 of the same finance bill amends the Tax Procedures Act, which is Section 42. This is the issue of where you have not paid your KRA, and KRA can appoint an agency to collect. What this means: if you have a dispute with KRA and you've not paid your taxes, the way the law is right now, if you've gone to KRA and you've disputed or challenged what KRA has assessed against you, they cannot issue an agency notice against you. It means they cannot collect your money from another third party. It means if you are owed money by another contractor, or if you have money in a bank, they cannot collect as long as you've challenged KRA.
[04:07] Then there's this issue of offshore transactions. Usually, offshore transactions that are linked with Kenya—whether 1% or 2%—usually for capital gains tax, those transactions don't pay. The standard is that when those transactions have a 50% investment that touches within the Kenyan market, then that is subject to capital gains tax—that is how it has always been under the Income Tax [Act]. It has always been lowered to 20%; now, with this new provision in capital gains tax, it takes it even to 1%.
[06:34] There's also the introduction of a 5% excise duty on coal. All these companies—steel companies—they all use coal. Already, the cost of electricity is high because of the fuel prices; now you increase excise duty on coal. Now let me tell you, coal in Kenya is taxed at 9.5%, in Uganda it is 2.5%, in Tanzania it is 1.5%. We are at 9.5%. It's not like we're giving these people an alternative—we don't have enough electricity, that's why we are using this coal. Then you go and add an excise duty on it.
[07:12] You know, there is also a 17.5% levy being introduced on steel raw materials. Local billets—those billets that you see that go to some of these industries—local billets go for 650 USD, imported is 490. Now we've put this levy. What will that mean? It means the total tax on wire rods will be 47%. The Kenyan billet will be at 22%. Now, here is the thing: Uganda is 1.5%, Tanzania 1.5%, Rwanda 1.9%, as we are talking about 22% for billets and wire rods at 47%.
[10:15] Also, there's the issue of zero-rating and exempting some of these imports. Now, when it comes to the steel industry, when you exempt rather than zero-rate, it means you cannot claim that duty back. When you zero-rate, it means you can claim input VAT. So, if you add some of these taxes, then give the steel companies and some of the local manufacturing companies at least the allowance to have it as zero-rated so they can claim input VAT. Now, if they are unable to claim input VAT, the people you're favoring are companies that are importing, because a company that is importing is already exempt from VAT, so they have no problem—they are able to claim it from the other side where they've come from. But what about our local companies?
[13:09] Because these new taxes—some of them will come in immediately, some of them will come in in January when they kick in—it means the cost of construction and the creation of jobs will reduce, and some of these costs will increase. And because of that, unfortunately, I cannot support this finance bill for 2026. Thank you very much.