How Will the Finance Bill 2026 Proposals Impact Your Capital Gains and Crypto Assets in Kenya?

We did part 1 of the Finance Bill 2026 and how it affects you as a taxpayer in Kenya. For part 2, we now look at how the proposed bill affects you as an investor here in Kenya. The Finance Bill 2026 carries one of the most consequential sets of proposals that Kenyan investors have seen in years. It targets the structures for entry, growth, and exit in investment sectors. The proposed bill cuts in two directions, closing longstanding barriers that minimized investors' tax exposure and enhancing access to Kenya’s capital markets and other investment sectors. Come, let's dive deeper into the effects the proposals might have on you as an investor. Remember, these are just proposals that have not been made into law yet.

These are the proposed changes as per the Finance Bill 2026

a) Capital Gains Tax (CGT) on Offshore Share Transfers conducted by a non-resident if the shares derive their value directly or indirectly from assets in Kenya and the transaction leads to a change in group membership of a Kenyan resident company. It is important to note that CGT applies during a transfer of a property or asset that is situated in Kenya. Over the years, Kenya has been unable to levy CGT on foreign investors who hold shares in Kenyan companies through offshore holding companies and sell them. Thus, the Bill will close this loophole since the underlying value is entirely Kenyan.

Foreign private equity funds structured through Mauritius or Delaware will pay CGT on exits. This applies even if the actual sale is not completed.

b) The bill proposes a single-tier trust taxation to replace Section 11 of the Income Tax Act. Income received by trustees and beneficiaries will not face further taxes, as taxes will have already been paid.

What this means: The proposed bill will help resolve ambiguity around Kenyan trusts arising from double taxation and facilitate generational wealth transfer, family business succession, and philanthropic structuring.

c) Non-Resident Rental Income Tax for diaspora investors, non-resident landlords, and foreign property holding companies at a rate of 30% as a final tax. This would be new since there was no clear framework for non-resident landlords and foreign property holding companies.

At the same time, the rental income tax rate for resident landlords will rise from 7.5% to 10%.

d) A Repatriated Tax on Mining, Oil, and Gas Investments for foreign investors within the mining, oil, and gas sector. The finance bill introduces a 15% non-resident tax on income that is repatriated by foreign and mining licenses and petroleum operations through permanent establishments in Kenya. Additionally, the bill reduces the corporate income tax for non-resident petroleum contractors from 37.5% to 30%. The tax rate aligns with the standard corporate rate, as it provides some offsetting relief.

e) The removal of the East African Community (EAC) preferential dividend rate. Currently, EAC citizens, that is, citizens from Uganda, Tanzania, Rwanda, Burundi, South Sudan, and DRC, receive dividends from Kenyan companies at a 5% preferential Withholding Tax rate. The bill proposes to remove the preferential rate and pay dividends to EAC citizens at 15% Withholding Tax rate, like non-residents. The reform aligns with jurisdictions in other EAC countries, such as Uganda and Tanzania.

f) The introduction of the deemed dividend rule to private companies that retain their earnings for reinvestment. With the proposed bill, these companies will be treated as having paid dividends to their shareholders, and either the company or shareholders would need to pay the withholding tax on the assumed payment. 60% of undistributed profits is what will be treated as dividends, limiting businesses and companies from reinvesting their earnings.

What this means: If you are a shareholder in a private company that retains its earnings, the company could be treated as one that has paid dividends even though you have not received them. Therefore, you or the company will be subject to withholding tax payments.

g) The proposed bill provides Capital Gains Tax and Stamp Duty for the exemption of the transfer of property into a registered Real Estate Investment Trust (REIT). It introduces the First Schedule to paragraph 76, which exempts capital gains tax on the transfer of property into REITS that are collective investment schemes. At the same time, it amends section 96A(1) of Stamp Duty by extending the stamp duty exemption to instruments that transfer a beneficial interest in property to REITs. These amendments aim at promoting the growth and expansion of REITs as investment vehicles.

h) The bill amends section 12 of the Tax Procedure Act (TPA) by introducing a KRA PIN exemption for non-residents when opening investment accounts to access Kenya’s Capital Markets. Non-residents will no longer need a KRA pin to open an account with an investment bank, which was considered one of the barriers for foreign participation in the capital markets.

i). Expansion of the definition of “royalty” for income tax purposes. Based on the proposed bill, the definition will now include three new categories of players. Category 1 will include proprietary digital platforms, payment networks, and card schemes. Category 2 will include distributors of software and SaaS platforms, and Category 3 will include industrial, commercial, and scientific knowledge holders. This is believed to be a legislative response to the Dynasoft and Seven Seas court cases. The software distributors won the cases by successfully arguing that their cross-border payments do not fall within the definition of royalties and thus cannot be subject to the withholding tax.

What this means to you as an investor is that if you are invested in a Kenyan business that pays licensing fees, SaaS subscription fees, and platform access fees to an offshore entity, the payments will be subject to withholding tax. This will increase the cost of technology for businesses.

j) Kenya has adopted the OECD’s Crypto Asset Reporting Framework through the Finance Bill. Due to the framework, Visual Asset Service Providers (VASPs) such as wallet providers and crypto exchanges will be required to file annual information returns highlighting the user relationships. Additionally, Kenya will enter into data-sharing agreements that will enable KRA to get Kenyans' crypto activity data and cross-reference it for income declared. Through this, capital gains and income earned become more visible, increasing the tax liability for Kenyans investors.

What this means: KRA will have data on your crypto activities and use this information to cross-check the total income that you declare during tax filing. This will determine your tax liability as an investor.

k) A win for local investors through asset finance and hire purchase. For asset-backed investments, VAT is normally charged on the full hire purchase amount, which includes the financing component. However, the Finance Bill has proposed amendments to the VAT Act to exclude the financial interest from the taxable value of goods that are registered under the Hire Purchase agreement. At the same time, the bill proposes the separation of the terms lending and leasing to lending or leasing in Section 16 of the Income Tax Act to ensure that leasing companies are not penalized for rules that apply to lending companies.

These two amendments will protect investors in asset finance businesses and their profit margins.

The proposed Finance Bill 2026 presents both the positive and negative aspects for both local and foreign investors here in Kenya. Therefore, as Urim Trader, we have prepared this guide for general informational and strategic planning purposes. It is based on the Finance Bill 2026 as tabled on 30th April 2026, which is currently undergoing parliamentary review and is subject to amendment. It does not constitute formal tax, legal, or financial advice. Urim Trader strongly advises consulting qualified tax and legal professionals before making any investment or transactional decisions.