Treasury to bring back second-hand clothes tax through amendments, Mbadi says

Mbadi, who was speaking while clarifying proposals in the Bill, said the mitumba tax plan would be brought back through amendments, arguing it was aimed at simplifying taxation in the sector by collecting the levy at the point of entry.

In the proposal, Mbadi said five per cent of the customs value would be treated as profit and taxed at 30 per cent, translating to a final tax of 1.5 per cent.

“This came from the mitumba people. It was their request… it has been dropped but I still insist that this particular recommendation… bring it back as an amendment,” Mbadi said.

He also dismissed claims that the Bill introduces new taxes on mobile phones or bottled water, saying some provisions had been taken out of context to mislead the public.

On PAYE, Mbadi said Treasury is open to reducing the tax burden but warned that the current simulations show that proposals such as zero-rating income up to Ksh30,000 from the current Ksh24,000 could create a Ksh35 billion revenue gap.

He said Treasury would reconsider if ongoing reforms at the Kenya Revenue Authority lead to improved collection from personal income tax.

Mbadi also defended proposals that would allow KRA to prepopulate tax liability based on income information from other sources, saying reliance on self-assessment is not enough and taxpayers would still have the right to challenge assessments.

“Tax is not a private affair… if you have issues with the assessment… you can challenge it,” Treasury tax adviser Risper Simiyu said.

Mbadi further argued that allowing KRA to collect disputed tax through agency notices during an ongoing case is meant to curb abuse of the court process by tax evaders.

Treasury maintains that the Finance Bill 2026 is intended to streamline tax administration rather than introduce new tax burdens.