Treasury Cabinet Secretary John Mbadi has announced that the proposal to impose a five percent presumptive tax on mitumba imports has been dropped.

Speaking during a press conference on Monday, May 11, CS Mbadi revealed that the National Assembly had rejected the proposal and that it could be left out of the final draft of the Finance Bill 2026.

However, he intimated that he will still push for the proposal to be effected as it was intended to benefit mitumba traders. The CS argued that the tax proposal was demonised before people understood what it meant.

“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 stated.

“Of course, the final bill comes from there. Our proposal was to have it, and I still insist that we should,” he stated.

The Treasury Boss claimed that he hosted a contingent of mitumba traders at the National Treasury, and the decision to impose the 5 percent presumptive tax was reached.

He explained that the levy would be minimal to the traders in comparison to the money they would spend to accurately file their taxes.

“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,” the CS explained.

As such, Mbadi explained that apart from 16 percent value added tax on the imported goods, the government would only charge the traders 1.5 percent of the value of the goods as income tax

The government would then assume that the traders would make a profit worth 5 percent of the value of the imported goods. This profit is now what will be subjected to 30 percent taxation as income tax.

“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,” he explained. 

The CS added that claims that the cost of mitumba clothes would rise following the new tax were far from the truth.

In an earlier response to concerns by former Law Society of Kenya (LSK) President Faith Odhiambo, officials from Treasury clarified that under the new proposal, the fragmented tax structure in the mitumba business was consolidated into a single predictable process.

The officials explained that the proposal eliminated multiple taxation points across the trade chain, reduced administrative complexity and eased compliance for traders.