Finance Bill 2026: Concerns raised over Ksh.100K fines for tax non-compliance

In the bill, the National Treasury is proposing to amend Section 77(2) on the computation of time for lodging objections and appeals.

The proposed amendment seeks to remove the provision that allows taxpayers more time to file complaints by excluding Saturdays, Sundays and public holidays when calculating timelines.

If passed, objection and appeal timelines will now be computed on a strict calendar-day basis, a move experts warn could significantly shorten the period available for taxpayers to prepare and submit complaints, exposing them to avoidable losses.

PricewaterhouseCoopers (PwC) has warned that deleting the provision excluding weekends and public holidays from the computation of timelines for tax complaints, objections and appeals would adversely affect taxpayers.

The firm noted that the changes would reduce the time available to prepare and lodge complaints, especially when deadlines fall close to weekends or public holidays, increasing the likelihood of missing statutory deadlines.

PwC stated that this could result in disputes being determined based on procedural technicalities rather than substantive merit.

“This increases administrative and cash-flow pressure on taxpayers involved in complex disputes, where internal approvals, collation of documentation or engagement of advisers is required within already tight statutory windows,” stated PwC analysts.

According to the advisory, this marks the second attempt to introduce a similar proposal after a comparable amendment failed under the Finance Act 2024.

“The reintroduction of the same proposal in the Finance Bill, 2026, represents a renewed attempt to reverse a recently enacted procedural safeguard, raising concerns around certainty and stability in tax dispute-resolution rules,” the advisory stated.

The Finance Bill 2026 also proposes changes to Section 86 on failure to comply with the electronic tax system.

Under the proposed amendments, the Commissioner would have powers to impose a Ksh.100,000 fine or twice the value of the tax due in cases where an individual fails to issue an electronic receipt and the explanation provided is deemed unsatisfactory.

However, PwC analysts cautioned that the proposed penalties could expose taxpayers to heavy financial burdens even in cases involving minor non-compliance or technical system failures.

“The introduction of minimum absolute penalties, particularly the Ksh.100,000 floor for non-individuals, may significantly increase exposure for taxpayers in cases of minor non-compliance or technical system failures where little or no tax is ultimately at risk,” the analysts stated.