The government’s controversial proposal to impose a five percent presumptive tax on second-hand clothing (mitumba) imports has been dropped from the Finance Bill 2026, but Treasury Cabinet Secretary John Mbadi is not letting the idea go quietly.
Speaking at a press conference on Monday, May 11, CS Mbadi confirmed that the National Assembly had cut the mitumba tax measure from the bill, effectively killing it for this legislative cycle.
“On the taxation around mitumba, I have noticed that it has been dropped out of the final bill that has come from the National Assembly,” he said. “Of course, the final bill comes from there. Our proposal was to have it, and I still insist that we should.”
The CS’s defense of a rejected proposal signals that the mitumba tax debate is far from over, even as traders and consumers celebrate its removal.
Where the Idea Came From
Mbadi traced the proposal back to a meeting he hosted with a delegation of mitumba traders at the National Treasury. Rather than a government imposition on struggling traders, the CS described it as a response to complaints the traders themselves raised about the existing tax system.
“They expressed frustration with regard to the current taxation arrangement because when you bring mitumba into the country, there are some taxes that should be paid at the point of entry, and then you follow it through with more taxes, including income tax. They are saying that it is cumbersome because in their line of business, the requirement of filing returns and even engaging accountants to calculate how much profit they make so that they are taxed on that is too costly for them,” Mbadi explained.
In other words, the proposal did not originate as a revenue grab; it grew out of traders telling the Treasury that the current system was too complicated and too expensive to navigate.
Breaking Down the Numbers
Mbadi also walked through the actual tax calculation to counter what he called a public misunderstanding of how the levy would have worked in practice.
Under the proposal, the government would have applied the 16 percent value-added tax on imports as usual. On top of that, the income tax component would work as follows: authorities would deem five percent of the customs value of the imported goods as profit, then apply the standard 30 percent corporate tax rate to that figure.
The result is an effective income tax charge of just 1.5 percent of the total value of the goods.
“For income tax, we deem 5 percent of the customs value as profit, and then we tax that 5 percent at 30 percent to give you 1.5 percent. This becomes the final tax, and nobody will go after the business people again,” the CS explained.
Mbadi argued that this simplified, flat approach would cost traders far less than what they currently spend navigating the fragmented tax system, including accountancy fees and the administrative burden of filing detailed income returns.
Dismissing the Price Hike Fears
The CS also pushed back firmly against warnings that the proposed tax would have driven up the price of second-hand clothes for ordinary Kenyan consumers. Mbadi called those fears inaccurate, arguing that critics attacked the plan before fully understanding its design.
In an earlier response to concerns raised by former Law Society of Kenya President Faith Odhiambo, Treasury officials laid out the core argument for the reform: replacing a fragmented, multi-point tax system with a single, predictable process
According to the Treasury, the plan would have removed multiple tax checkpoints across the mitumba supply chain, cut administrative complexity significantly, and made it far easier for traders to stay legally compliant without needing professional accounting support.
With the National Assembly dropping the measure from the Finance Bill 2026, mitumba traders and importers can breathe easy for now. But Mbadi’s public insistence that the proposal remains the right policy approach suggests Treasury could revive the idea in a future Finance Bill.
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