KRA Is Coming For Your M-Pesa In the New Finance Bill 2026

So the public participation deadline is Monday. The National Assembly Departmental Committee on Finance and National Planning is concluding public participation for the Finance Bill 2026, with the window for written submissions slamming shut this Monday, May 25, 2026, at 5:00 PM.

This moment mirrors the tense standoff of 2024, when widespread public outrage forced the executive to shelve aggressive fiscal proposals. But the state learned a profound lesson from that retreat. Rather than risking another highly visible, head-on legislative battle over data privacy, the current administration has engineered an administrative workaround. It achieves total visibility over personal wealth and daily commerce, bypassing the standard constitutional roadblocks completely.

The Three-Pronged Mobile Money Trap

The most urgent provisions in the bill form a coordinated, three-pronged assault designed to capture, track, and squeeze the digital financial ecosystem. By December, the legislation establishes a state-controlled architecture that fundamentally reshapes mobile money through three explicit mechanisms:

1. A New 16% VAT on Transaction Fees: The bill introduces a fresh 16 percent Value Added Tax on digital platforms and mobile money transaction fees. This sits squarely on top of the existing 20 percent excise duty. Two distinct taxes will be extracted from the exact same transaction, turning basic mobile liquidity into a punitive expense.
2. Expanded Commissioner Access Powers: The bill drastically broadens the Kenya Revenue Authority's (KRA) data-gathering capabilities. It grants the Commissioner General explicit powers to independently assess tax liabilities by directly tapping into a wider net of information sources, pulling data seamlessly from payment networks without requiring case-by-case parliamentary or judicial permission.
3. Automated Tax Registers via Merchant Tills: Every merchant paybill and till number in the country will be legally converted into an electronic Tax Invoice Management System (eTIMS) register linked directly to the KRA. Real-time invoice verification means visibility is hardcoded straight into the business software.

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> The 36% Fiscal Wall: When the 16% new VAT is combined with the existing 20% excise duty, the state's cumulative take on gross mobile money transaction fees reaches a staggering 36%.

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Bypassing Parliament for Visibility

To understand why this bill is so insidious, one must look at how the state shifted its legislative tactics after 2024. In the previous cycle, the state attempted to explicitly amend the Data Protection Act to give the KRA an absolute exemption from privacy rules. Safaricom and civil society successfully pushed back, leaning on privacy laws to shield user data from unchecked state surveillance.

This time, the government does not need to touch the Data Protection Act. It has completely bypassed parliamentary privacy scrutiny by reframing data transmission as routine administrative compliance. Under the eTIMS framework, transaction data is transmitted to the state in real time as an invoice verification requirement rather than a surveillance request. There is no privacy question for Members of Parliament to vote on; surveillance has been re-engineered into an IT update.

Proponents of the bill rely on a single, repetitive narrative to justify these measures: Kenya is trapped in a profound fiscal crisis, suffocating under a massive debt burden. They insist that pulling the visibility lever and deploying aggressive digital surveillance is the only alternative to absolute economic default.

But this argument is fundamentally incomplete. Pulling the quick administrative lever today might be easy, but relying on coercion over substance is exactly what causes Kenya's recurring fiscal crises.

The Third Option: Formalization Through Service Provision

The state treats the 83% informal economy as a hiding place that must be breached via tracking tools and backend automation. This completely misinterprets how healthy economies grow. True economic formalization is a social contract, not an exercise in administrative coercion.

There is a viable third option: formalization through service provision.

Instead of treating visibility as something to be stolen through software workarounds, the state can expand the revenue basket by making formalization genuinely worth it. When a government consistently delivers high-quality public goods, the informal sector steps into the light voluntarily. Traders and small business owners willingly formalize when the state on the other side is worth formalizing into. This requires delivering real, tangible value:

• Functional Public Healthcare: Universal, reliable healthcare systems that remove the catastrophic financial shocks of illness for families and workers.
• Reliable Courts and Contract Enforcement: A swift, transparent legal framework where small micro-enterprises can enforce agreements and settle disputes without being priced out.
• Infrastructure Built for Small Businesses: Accessible transport links, reliable electricity grids, and affordable digital spaces tailored to grow local commerce rather than penalize it.

When visibility is achieved purely through aggressive backend automation, punitive digital tolls, and shortened filing windows (such as the proposed shift from a six-month to a four-month filing deadline), the state breaks the social contract. Instead of expanding the tax base, this level of coercion actively forces small businesses back into the unmonitorable safety of hard cash, harming fundamental human rights and privacy rights along the way.

How to Submit Your Objection Before Monday

The executive is banking on public exhaustion and technical obscurity to pass these measures with minimal friction. Organized civic pressure derailed overreaching fiscal policy before, and the ongoing public participation window is the only mechanism capable of halting this transition.

If you want to submit your views, you must act immediately. The National Assembly accepts formal written memoranda from citizens and stakeholders until Monday, May 25, 2026, at 5:00 PM.

<Sequence> <Step subtitle="Include critical details" title="Draft your written memorandum"> Write out your specific objections to the Finance Bill 2026. Explicitly mention the 16% VAT on digital transaction fees, expanded KRA data access powers, and the forced eTIMS merchant till integration. Address your document to the Clerk of the National Assembly. </Step> <Step subtitle="Send before Monday 5:00 PM" title="Submit via official email"> Email your signed memorandum as a PDF attachment directly to the official parliamentary intake address: cna@parliament.go.ke. </Step> <Step subtitle="Digital upload option" title="Alternative online portal filing"> You can also upload your submission directly through the official Parliament of Kenya portal at parliament.go.ke under the public participation section. </Step> </Sequence>

If the public chooses to remain silent now, the quiet automation of state surveillance will become an inescapable economic reality by December.