The Finance Act 2026 officially came into force on July 1, introducing wide-ranging tax changes that will affect workers, landlords, gamblers and businesses as the government moves to broaden the tax base and strengthen revenue collection.
One of the most significant changes is the introduction of a 20 per cent withholding tax on betting winnings. Under the new system, betting companies will now be required to deduct the tax before paying out winnings and remit it directly to the Kenya Revenue Authority (KRA).
This marks a shift from the previous arrangement, which taxed withdrawals from betting accounts. For instance, a gambler who wins Ksh100,000 will now receive Ksh80,000 after Ksh20,000 is withheld and sent to KRA.
The Act also introduces a new tax regime targeting non-resident landlords earning rental income from property in Kenya. Foreign landlords will now be required to register with KRA, file monthly returns, and pay final rental income tax by the 20th of the following month.
Another key measure is the introduction of a 1.5 per cent withholding tax on payments made for the sale of scrap metal, with buyers required to deduct and remit the tax before paying suppliers.
Foreign investors in mining and petroleum sectors will also face a 15 per cent tax on repatriated income starting January 1, 2027, applied when profits are transferred out of the country.
While several new taxes have been introduced, workers have also received relief in specific areas. The Act exempts employer contributions to qualifying gratuity schemes from income tax, provided employment contracts run for at least three years and the gratuity does not exceed 31 per cent of an employee’s earnings over the contract period.
In addition, pension death benefits have been fully exempted from income tax, allowing beneficiaries of deceased pension scheme members to receive payments without deductions.
Beyond new tax measures, the Finance Act 2026 also strengthens the Kenya Revenue Authority’s enforcement powers. KRA has been granted enhanced authority to pursue compliance, particularly targeting employers who fail to remit the Affordable Housing Levy to the relevant authorities on time.
The changes are part of broader government efforts to increase revenue collection while adjusting tax structures across different sectors of the economy.