Importers of food commodities like rice and wheat, along with alcohol consumers, startups, and homeowners, are among the biggest beneficiaries of the 2025/26 national budget, presented by Treasury Cabinet Secretary John Mbadi on Thursday.
One of the most notable proposals is a reduction in excise duty for denatured extra neutral alcohol (above 90% strength), which is used in the manufacture of spirits. The Excise Duty Act is set to be amended to introduce a flat rate of Sh500 per litre, a measure aimed at lowering production costs for licensed spirit manufacturers. This could result in lower retail prices for alcoholic beverages, marking the first significant tax relief for the sector in years.
Homeowners are also set to benefit, with tax relief on interest paid on mortgages expanded to cover more categories of home loans. This is part of the government’s strategy to promote affordable housing and increase home ownership rates.
The construction sector has received a boost through a reduction in excise duty on billets and wire rods, key raw materials used in steel manufacturing, to support the local building and infrastructure industry.
Leather processors were also cited as beneficiaries. The Treasury announced remission of import duty on tanning chemicals, in a bid to revitalize local tanneries and promote value addition in the leather value chain.
In a move to foster innovation and entrepreneurship, the budget proposes that startups will enjoy a corporate tax rate of 15% for the first 15 years, followed by 20% for the next four years. This is designed to ease the tax burden and support the growth of young businesses.
Cryptocurrency investors and traders will benefit from a reduction in the digital asset tax, with the withholding rate halved from 3% to 1.5%, to encourage broader participation in the emerging financial technology space.
However, not all sectors welcomed the budget proposals.
Plastic product importers face a blow, with the introduction of a 25% excise duty or Sh200 per kilogram on imported plastic items — including plates, printed polymers, and self-adhesive plastics — whichever is higher. The move aims to promote environmental sustainability and protect local manufacturing.
Foreign digital service providers also came under the tax spotlight. The budget proposes changes to the Excise Duty Act to tax non-resident providers of digital services with no physical presence in Kenya, aligning with global trends in taxing the digital economy.
“These measures are aimed at supporting local industries, enhancing tax fairness, and promoting economic inclusivity,” said CS John Mbadi during his address to Parliament.
The budget continues to prioritize food security, affordable housing, manufacturing, and youth empowerment, aligning with the government’s Bottom-Up Economic Transformation Agenda.
