The new budget affects you. These 3 measures change your taxes

📱 1. Digital payments and card transactions: the expensive bill

Interchange fees and card transaction commissions are now subject to Withholding Tax, after the Finance Act 2026 explicitly overturned the Supreme Court decision that exempted them . Digital payment processing fees (gateway, acquisition, settlement) are now subject to 16% VAT .

Concrete impact: On a merchant paying 100 KES in commission, the total tax cost would jump from 15 KES to 53.4 KES according to the Kenya Private Sector Alliance . This increase will likely be passed on to your prices. Consequence: M-Pesa and card payments become more expensive. And KRA now has access to your transaction data to cross-check your declarations .

⏰ 2. Filing deadlines: a race against time

Annual income tax returns must now be filed by 30 April, instead of 30 June . Nil returns must be filed by 31 January .

Concrete impact: You have 2 fewer months to prepare your accounts. For SMEs without an in-house accountant, this is added pressure. The risk of errors increases. And so do late penalties. Update your financial closing processes now .

🔄 3. Labour outsourcing: the unexpected relief

The Finance Act 2026 reversed the High Court's decision in the Techsavana case . Salaries, statutory deductions, and other costs related to outsourced staff are now considered "disbursements" made on behalf of the client. VAT no longer applies to these amounts, only to the outsourcing agency's service fees .

Concrete impact: If you outsource staff (security, cleaning, IT, etc.), you'll pay less VAT. A breather for businesses using these services, and an incentive to formalise these contracts.

Tip: Take advantage of the KRA Tax Amnesty, running until 31 December 2026. KRA waives 100% of penalties and interest on tax debts incurred before 1 January 2026, if you pay the principal . A boost to regularise your situation without breaking the bank.

Do it now: Log in to iTax. Check your deadlines. Prepare for the new April 2026 filing deadline. One hour today saves you a penalty tomorrow.

Sources: KRA – Finance Act 2026; Kenya Revenue Authority – Public Notices (Excise Duty, Tax Amnesty); Academy of Tax Law – Finance Act 2026 Analysis; Business Daily – Finance Act 2026 Analysis; Kenya Private Sector Alliance (KEPSA) – Press Release (May 2026); Hivileo – Ground-Level Reality for SMEs.

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