122 YES. 40 NO. THE FINANCE BILL 2026 PASSED. NOW WHAT?

By Kenya Politics | kenyapolitics.co.ke | June 21, 2026 | Updated: June 21, 2026

Reading time: 8 minutes

Thursday night, June 18, National Assembly Speaker Moses Wetangula read out the numbers that will define Kenya’s political week.

“The ayes, electronic vote 103, manual vote 19, total 122. The nays, electronic vote 36, manual vote 4, total 40. Abstentions nil. The ayes have it.”

The Finance Bill 2026 passed its third reading through an electronic vote and now awaits President William Ruto’s assent before it becomes law. Full vote coverage via Daily Nation.

Four days before June 25th.

That timing is not accidental and it is not irrelevant. Exactly two years ago a Finance Bill passing through this same parliament triggered the most significant political uprising Kenya has seen since the 2007 post-election violence. Over 60 people died. Parliament was breached. The government withdrew the bill entirely — something no Kenyan government had ever done before. Ruto called it a dark day. The streets called it a victory.

This time the bill passed. And June 25th is four days away.

WHAT IS ACTUALLY IN THIS BILL

The government’s position throughout the debate was that the Finance Bill 2026 is a measured, targeted piece of legislation with fewer broad-based tax increases than previous years. Majority Leader Kimani Ichung’wah said it repeatedly and he is not entirely wrong. Compared to the 2024 Finance Bill which proposed taxes on bread, cooking oil, sanitary pads and financial transactions, the 2026 version is narrower in scope. See full KPMG analysis of the Finance Bill 2026.

But narrower does not mean painless. Here is what it actually does:

Rental income tax rises from 7.5% to 10%. That increase lands directly on landlords who will pass it immediately to tenants. In a city where rental costs already consume 40 to 60 percent of middle and lower income household budgets, a rental tax increase is not an abstraction. It is next month’s rent notice.

Withholding tax on merchant service fees and interchange fees. Every business that accepts card payments — every supermarket, petrol station, hotel and restaurant — now has a new tax obligation on the transaction infrastructure itself. That cost does not stay with the business. It moves to the price of whatever you are buying.

Expanded withholding tax on digital payments. The government removed the proposed VAT on M-Pesa and Airtel Money after public pushback — that was a genuine concession. But the expanded withholding tax framework means the digital economy is still in the crosshairs, just through a different door. See Bowmans law firm analysis.

15% capital gains tax on indirect share transfers by non-resident investors. This targets foreign private equity and venture capital firms that have historically used offshore structures to exit Kenyan investments without paying local tax. The policy logic is sound. The investor uncertainty in the short term is real. Full CNBC Africa analysis here.

Tax amnesty until December 31 2026. Covering liabilities up to December 31 2025. A genuine olive branch to businesses that have accumulated compliance gaps and want to regularise without facing punitive enforcement.

Mitumba — what actually changed. VAT on second-hand clothing is applied only at the point of importation. Once goods enter Kenya, all domestic sales are VAT exempt. The government says this is a simplification, not a new tax. Opposition MPs say the VAT that mitumba traders previously claimed is now gone. Capital FM has the clearest breakdown of the mitumba clause.

THE VOTE AND WHAT IT REVEALED

The 122 to 40 split is not surprising. The government controls the National Assembly and has done since the broad-based government absorbed ODM in 2023. What is revealing is the character of the 40 who voted no. Full list of the 40 MPs via Nairobi Leo.

Gachagua instructed all DCP-allied MPs to vote no and stay in the chamber to force a formal division vote. Most of them did. The opposition bloc held together better on this vote than on almost anything in the current parliament.

Gachagua’s response was immediate and pointed. “History will remember the 40 Honourable Members of the National Assembly who, on Thursday 18th June 2026, stood with the people of Kenya. You are the true heroes of our nation,” he said. He told their constituents to show them kindness on August 10 2027. That is not a compliment. That is a campaign document.

One MP, Samson Sangok Kalasinga, was physically removed from the National Assembly before the vote. He alleged publicly that it was deliberate — a scheme to reduce the no votes before the division. Citizen Digital reported his statement in full. The government has not responded to the allegation.

Ndindi Nyoro, one of Ruto’s most visible allies in the Mount Kenya region, missed the vote entirely. He says he was travelling abroad on official duty and acknowledged his absence does not absolve him of responsibility. His constituents in Kiharu are asking why.

Martha Karua had the sharpest line of the week. She hit out at MPs who opposed the bill publicly but did not vote against it. “Any Kenyan can do that,” she said. Showing up and voting no is what costs you something.

She is right.

COFEK IS ALREADY IN COURT

The Consumer Federation of Kenya moved to the High Court at Milimani on June 15 — three days before the final vote — seeking to block six specific provisions of the Finance Bill 2026. Justice David Mburu received the application. Standard Media has the full court petition details. Business Daily Africa also covered the case here.

The six provisions COFEK is challenging:

The removal of VAT exemptions on essential goods including basic foodstuffs, health products, agricultural inputs and educational materials — converting zero-rated supplies to 16% VAT.

The expanded withholding tax on digital payment infrastructure including merchant service fees and card schemes.

The 1.5% withholding tax on scrap metal transactions applied on gross proceeds rather than actual profit — a distinction COFEK argues is constitutionally unfair to the informal sector workers who dominate that trade.

The expanded definition of royalties covering digital financial infrastructure.

The expanded KRA enforcement powers including a General Anti-Avoidance Rule that COFEK argues gives the Commissioner-General the power to impose tax liabilities without adequate procedural safeguards.

The virtual asset reporting requirements mandating that crypto service providers share user and transaction data with the KRA and foreign tax authorities — which COFEK argues violates the Kenya Data Protection Act 2019.

COFEK Secretary General Stephen Mutoro put it plainly in the court documents. “The Finance Bill contains far-reaching fiscal, economic, regulatory and constitutional implications affecting consumers, taxpayers, businesses, investors, informal sector participants and members of the public throughout the Republic of Kenya.”

This matters because it means the Finance Bill 2026 fight does not end with Thursday’s vote. Even after Ruto signs it, a court injunction could block implementation of the contested provisions. Kenya has been here before. The Finance Act 2023 faced similar legal challenges. Some provisions were blocked for months.

THE JUNE 25TH QUESTION

Police have issued a conditional approval for demonstrations next week. That sentence alone tells you how charged the atmosphere is. You do not conditionally approve protests unless you expect them to happen and are trying to manage the terms.

The Finance Bill 2026 passing on June 18 has handed the organisers of any June 25th action the clearest possible rallying point. The 2024 protests were sparked by a Finance Bill. That Finance Bill was withdrawn. The 2026 Finance Bill just passed four days before the anniversary of those protests. The government walked into this moment with its eyes open.

The question is not whether people will be on the streets on June 25th. The question is whether the energy is organised enough to produce a political outcome — or dispersed enough to be absorbed.

In 2024 the energy was specific, documented and directed at a single piece of legislation. The government withdrew the bill. In 2025 the energy was lower temperature and more fragmented. The government absorbed it. In 2026 the bill has passed. There is nothing left to withdraw. The only remaining levers are the court, the street and the ballot box in August 2027.

Ruto will sign this bill. COFEK’s case continues. And on Wednesday June 25th, Kenya will find out which lever this generation has decided to pull.

FREQUENTLY ASKED QUESTIONS

What is the Finance Bill 2026?
The Finance Bill 2026 is Kenya’s annual legislation that proposes changes to tax laws to support the 2026/27 national budget. It was passed by the National Assembly on June 18 2026 with 122 votes in favour and 40 against. It awaits presidential assent before becoming law.

What new taxes does the Finance Bill 2026 introduce?
The key changes include an increase in residential rental income tax from 7.5% to 10%, withholding tax on digital payment infrastructure including merchant service fees, a 15% capital gains tax on indirect share transfers by non-resident investors, and expanded KRA enforcement powers. VAT on M-Pesa was removed from the bill after public opposition.

Who voted against the Finance Bill 2026?
40 MPs voted against the bill including legislators allied to Gachagua’s DCP, opposition-aligned MPs from Wiper and independents. The full list was published by Nairobi Leo.

Is the Finance Bill 2026 being challenged in court?
Yes. COFEK filed a petition at Milimani High Court challenging six provisions of the bill on constitutional grounds including consumer rights, privacy under the Data Protection Act, and fair administrative action.

What happens on June 25th 2026?
June 25th marks the second anniversary of the 2024 anti-Finance Bill protests in which over 60 Kenyans died and parliament was breached. Police have conditionally approved demonstrations. The passing of the Finance Bill 2026 four days before this date has intensified calls for street action.

Can the Finance Bill 2026 still be stopped?
The bill requires presidential assent to become law. Even after assent, a court can issue conservatory orders blocking specific provisions pending a constitutional hearing. COFEK is seeking exactly that.

SOURCES AND FURTHER READING

Kenya Politics is an independent political media platform covering Kenya and East Africa. We track who covers what, who changes stories and who stays silent. Follow us on X @kenya_politics_ for real time analysis and breaking political news.

Related reading on Kenya Politics:
— Can Ruto Be Impeached? Here Is What the Constitution Actually Says
— The Gachagua Ruling Explained: What the Court Found and What Comes Next
— June 25th 2026: What Kenya Is Walking Into

WHAT IS ACTUALLY IN THIS BILL

THE VOTE AND WHAT IT REVEALED

COFEK IS ALREADY IN COURT

THE JUNE 25TH QUESTION

FREQUENTLY ASKED QUESTIONS

SOURCES AND FURTHER READING