Finance Bill will hurt jobs, push investors away, KEPSA warns as it fights VAT on digital services

Hinzugefügt: 2026-05-26

[00:00:00]is calling on Parliament to rethink several proposals in the Finance Bill 2026, warning that excessive taxation could hurt businesses, reduce jobs, and slow economic growth. Modoni Brenda tells us more.

[00:00:13]Yes. Yes. Anyone on ones? Taxing for growth, not taxing for survival. Yes, please.

[00:00:19]That was the message from the Kenya Private Sector Alliance Kepsa and the Kenya Bankers Association as they read out recommendations submitted to the National Assembly on the Finance Bill 2026.

[00:00:31]And yes, while as we have sorted out of our ease of doing business, a new challenge has come and and and this new challenge is the cost of doing business.

[00:00:40]The private sector fears that the proposed taxes on production materials, aircraft parts, and electric mobility products could ground industries instead of growing them by driving up production costs and pushing investors across the border. You've got to be world class today, otherwise you're no class.

[00:00:58]There's nothing kati-kati. Right? And I think we've got to realize that. There are our neighbors in the ecosystem that we operate under East African Community uh where the cost of manufacturing is far lower than than Kenya is, for example. Yes, Kenya has some benefits in terms of cost, the productivity of our our workers, our youth is far higher than our neighboring countries, but this gives you some cushion, but the truth of the matter is, and I've been talking about we need to drive We need to look at each and every driver of competitiveness.

[00:01:33]Kepsa is also pushing for Parliament to retain legal safeguards that stop company bank accounts from being frozen before tax disputes are fully determined in courts. The alliance is now proposing a reduction of the maximum PAYE rate from 35% to 30% and an increase in personal tax relief to 3,000 shillings monthly. Now, this proposal is not a loss to government the way government will want to put it. In fact, it's an investment that will be able to generate much more. So, just confirm with the chairman of the fact that in the first year we are able to expand our economy to the extent of 210 billion shillings.

[00:02:16]With that expansion, we will be able to mobilize in excess of 33 billion Kenya shillings.

[00:02:23]And that offsets the 28.1 that is perceived to be a gap or a loss from government. According to the Kenya Bankers Association, the proposed 16% VAT on digital financial services would increase transaction costs and discourage the use of digital payment systems, ultimately pushing more Kenyans back to cash transactions.

[00:02:48]Matatus and informal economy, government cannot be able to collect revenue in that ecosystem.

[00:02:54]So, it's up to government to decide whether they want to collect taxes or not. If they want less taxes, we are okay with the matatus and we are okay with informality. But if they want us, the formal systems, to be able to help them mobilize taxes, then we in fact need to reduce the cost on payments.

[00:03:23]With the private sector urging for tax reliefs, Kepsa and the KBA are asking lawmakers to protect jobs while stimulating business growth. Focus now shifts to the National Assembly to balance these recommendations against revenue targets, fiscal sustainability, and government priorities. Yvonne Brenda for TV47, Nairobi.