A legal challenge has been mounted against several provisions of Kenya’s Finance Bill 2026, setting the stage for a fresh battle over taxation, consumer rights and constitutional safeguards.
The case was filed at the High Court in Milimani by the Consumer Federation of Kenya (COFEK), which is seeking orders to halt the enactment and implementation of disputed tax measures until the matter is fully heard.
The lobby group argues that Parliament is moving swiftly towards passing provisions that could significantly change how millions of Kenyans are taxed.
According to the petition, adequate protections for consumers have not been provided.
Questions have also been raised about privacy, public participation and fair administrative action.
Warning Over Lasting Impact
COFEK argues that once the proposed measures become law, the effects could be immediate.
The organisation warns that any constitutional violations may be difficult to reverse after implementation.
At the centre of the dispute are new taxes targeting digital payments, virtual assets and scrap metal transactions.
The federation also objects to plans that would remove VAT exemptions and zero-rated status from several essential goods and services.
Conservatory orders have therefore been sought to preserve the status quo while the court reviews the matter.
Digital Payments Under Scrutiny
Particular concern has been raised over proposed tax measures affecting digital payment systems.
COFEK argues that additional taxes and fees imposed on payment processors, card schemes and financial infrastructure providers could increase operating costs across the sector.
Those expenses, the federation says, would likely be transferred to consumers through higher transaction charges.
Banks, financial technology firms and payment service providers could all be affected.
Ultimately, the burden could be felt by ordinary Kenyans who increasingly rely on digital platforms for daily transactions.
Concerns for Small Traders
The petition also challenges a proposed 1.5 per cent withholding tax on scrap metal transactions.
COFEK argues that the tax would be imposed on gross proceeds rather than actual profit.
That distinction, it says, is critical. Many participants in the scrap metal trade operate on narrow margins.
Waste pickers, youth groups and small-scale dealers could face disproportionate costs under the proposal.
According to the federation, a turnover-based tax risks penalising low-income earners regardless of whether profits are made.
Essential Goods at Centre of Debate
Strong objections have also been raised over proposed changes to VAT treatment on basic goods and services.
Products affected could include food items, health-related products, agricultural inputs and educational materials.
COFEK argues that moving such supplies to the standard VAT rate would increase production and distribution costs.
Those increases, it says, would eventually be passed on to consumers through higher prices.
The federation further contends that no clear transition framework has been outlined to shield households from potential price shocks.
Constitutional Questions Raised
Beyond the economic impact, broader constitutional issues have been cited.
The petition asks the court to determine whether the contested provisions meet standards of equitable taxation and transparency.
Questions are also raised about meaningful public participation and the protection of privacy rights in an increasingly digital economy.
The challenge comes as Parliament advances deliberations on the Finance Bill, one of the government’s key revenue-raising measures.
For supporters, the proposals are intended to expand the tax base and increase public revenue.
For critics, the measures risk placing additional pressure on households already grappling with a high cost of living.
The final decision now rests with the courts, where the balance between revenue collection and constitutional protections is set to be tested once again.
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