What Is Being Proposed?

The Finance Bill 2026, currently before Parliament, includes provisions for new digital services taxes and expanded tax reporting requirements on mobile money transactions. An expert quoted by Capital FM warns the proposals could "slow financial inclusion" — the very progress that has brought millions of Kenyan small retailers into the formal economy through M-Pesa.

According to reporting by Capital FM (May 21, 2026), the bill targets digital payments and mobile money services with new tax measures that hit hardest at the people who use them most — small business owners and individual traders.

Why This Matters for Your Duka or Online Shop

If you accept M-Pesa payments — and most Kenyan retailers do — any new tax on digital transactions affects you directly. Here is how:

• Higher transaction costs. If the government imposes new taxes on mobile money transfers, M-Pesa charges may rise. For a duka doing 20-30 M-Pesa transactions daily, even an extra KES 5 per transaction adds up to KES 3,000-4,500 per month — money that comes out of your margin.
• Reporting requirements. The bill expands KRA's ability to request transaction data from mobile money providers. This means your M-Pesa statement becomes more than a record — it becomes a tax document. Sellers who have been operating informally will need to start keeping proper records.
• Reduced digital adoption. The expert warns that taxing digital payments could push some small businesses back to cash. That is bad news for anyone who has built their business around mobile money — from the Instagram seller in Eastleigh to the duka owner in Kisumu.

What This Means for the Digital Hustler

If you sell on Instagram, WhatsApp, or TikTok and rely on M-Pesa for every transaction, the Finance Bill 2026's digital tax proposals directly threaten your business model. A tax on digital transactions means higher costs for you and potentially lower willingness from customers to pay via M-Pesa.

For sellers processing KES 100,000-300,000 monthly through M-Pesa, the cumulative effect could be significant. You need to start factoring potential tax costs into your pricing now.

What This Means for the Duka Commander

For physical shop owners, the reporting requirements are the bigger concern. KRA already has visibility into M-Pesa transactions above certain thresholds. Expanded powers mean your shop's digital trail becomes more transparent.

This is not necessarily bad news — it is a warning to get your records in order. Start tracking your daily sales in a notebook or spreadsheet. Know your actual profit margins. The retailers who have clean books will navigate this much more easily than those who have been operating entirely off the books.

What Happens Next

The Finance Bill 2026 is still in Parliament. It may change before it becomes law. But the direction is clear: the government sees digital payments as a growing source of tax revenue, and small businesses — the backbone of Kenya's economy — will be in the crosshairs.

Kenya's small retailers have two moves to make right now: organise your records and pay attention to what Parliament does with this bill. Your M-Pesa account is no longer just a payment tool — it is becoming a tax record. Treat it like one.