Recently, the President signed the Finance Bill 2026 into law. This came after weeks of debate, press conferences, shouting matches, and threats of protests, similar to what happened in June 2024. Around this time every year, Kenyans and investors, both local and foreign, hold their breath in anticipation of what will be in the Finance Bill. This anxiety is not good for business and makes Kenya an unattractive destination for investment.
Businesses are forced into an annual round of amended VAT schedules, new levies, and revised thresholds, which result in new forecasts, new projections, and at times changed plans. Operationally, this manifests as payments to accountants, tax experts, and lawyers, as well as compliance officers, to interpret what the government wants from them this time.
It gets worse for businesses. We all saw what happens when this unnecessary ritual goes too far. In June 2024, Kenyans took to the streets in protests that shook the region, leaving over 60 people dead, and a withdrawal of a Finance Bill that had already passed through the National Assembly. Businesses suffered losses, and to this day, June 25 remains a day on which hardly any business is conducted in Nairobi.
Today, if you ask anyone in business, from the Jua kali traders in Gikomba, the tech entrepreneur, or the institutional investors that trade in the Nairobi stock market, what they need most about the tax regime, the answer is rarely low taxes; it's certainty. The ability to look 18 months ahead and say, with reasonable confidence: These are the rules I am operating under. The now annual Finance Bill makes that impossible.
The National Tax Policy, ratified in 2023 and aligned to the Fourth Medium-Term Plan (2023-2027) of the Kenya Vision 2030, states clearly that frequent changes to tax laws cause unpredictability in the tax system, leading to distortions and a costly tax administration structure. The policy then promises to minimise changes and provide stability in the tax system to enhance certainty and consistency, which are key considerations for investors. Sadly, the annual amendments through the Finance Bills do the exact opposite.
Annually, officers in the National Treasury go through the Income Tax Act, the VAT Act, the Excise Duty Act, and the Tax Procedures Act with a fine-tooth comb, opening them up for amendments. What follows is that corporations and small businesses are forced to review provisions that they had built their operations and projections around. This becomes more of a moving target than a tax system.
Kenya is a country with real competitive advantages, the strongest financial sector in East Africa, extraordinary telecoms infrastructure, a young and digitally literate workforce, and a gateway position into a 500-million-person regional market. However, capital is cowardly. It flows toward predictability and away from ambiguity. Despite the opportunities and competitive advantages enjoyed by Kenya, the erratic tax regime is off-putting to investors.
It is paramount that the National Treasury complies with the National Tax Policy in simplifying the tax regime and drastically reducing the annual amendments to the tax laws. This will not only ensure proper planning by both businesses and the government, but it will also position Kenya as an attractive investment destination and attract capital for investments.
The writer is a member of the Institute of Certified Public Accountants of Kenya (ICPAK)
