NAIROBI, Kenya, June 13 – Deloitte has cautioned that some of the tax proposals contained in the Finance Bill 2026 could increase the cost of goods and services, even as the government seeks to raise revenue, broaden the tax base and strengthen compliance.
Speaking during the launch of Deloitte Kenya’s Budget Highlights 2026/27 report in Nairobi, Deloitte East Africa Tax and Legal Partner Fred Omondi said the Bill introduces a raft of measures aimed at enhancing revenue collection, including a deemed dividend distribution threshold of 60 percent of undistributed company profits, an expanded definition of royalties covering software distribution and payments to digital platforms and card networks, higher excise duty on sweetened fruit and vegetable juices, and the rationalisation of VAT exemptions and zero-rating.
“Some of these proposals risk raising the cost of goods and services in the affected sectors,” Omondi said.
The report, themed Balancing Fiscal Realities with Public Expectations, was unveiled during a forum that brought together industry stakeholders and tax experts to assess the implications of the National Budget 2026/27 and the Finance Bill 2026 on businesses and the wider economy.
Deloitte East Africa Tax and Legal Partner Lilian Kubebea noted that the proposed tax measures signal a policy direction focused on revenue resilience, technology-driven enforcement and taxation of emerging economic activities.
“As Parliament considers the proposals, businesses must examine not only direct tax liabilities but also the indirect tax effects that will be embedded in pricing, contracts, supply chains and consumer demand,” she said.
Kubebea added that businesses are likely to face increased compliance requirements in the coming financial year, prompting adjustments in pricing strategies, contracts, operations and systems to manage cash-flow and competitiveness pressures.
Deloitte East Africa Tax and Legal Associate Director Fredrick Kimotho raised concerns over frequent amendments to tax laws, warning that policy uncertainty could discourage investment.
“Investors — both local and foreign — need certainty to commit to long-term projects. When tax laws keep oscillating, businesses delay or cancel investments, and that can shrink the tax base the government is trying to protect,” he said.
Kimotho urged policymakers to ensure reforms are well communicated, phased in gradually and accompanied by clear transition measures to minimise disruption and maintain Kenya’s competitiveness.
Meanwhile, Deloitte East Africa Strategy, Risk and Transactions Partner Gladys Makumi called for greater accountability in budget implementation, arguing that policymakers should regularly assess whether previous financial year targets were achieved before setting new priorities.
She also pointed to global geopolitical tensions, particularly between the United States and Iran, as a source of uncertainty that could affect Kenya’s economic outlook through higher fuel prices and supply chain disruptions.
The Budget Highlights publication analyses the country’s economic outlook and proposed measures aimed at increasing income tax collection, expanding the tax base and boosting revenues through direct and indirect taxes.
It also examines government priorities in key sectors including financial services, agriculture, micro, small and medium-sized enterprises (MSMEs), housing, healthcare and the digital economy, outlining both opportunities and challenges expected in the coming fiscal year.
