The Income Tax (Amendment) Bill, 2026

SPECIALISSUE

Kenya Gazette Supplement No. 100 (National Assembly Bills No. 20)

REPUBLICOFKENYA

KENYA GAZETTE SUPPLEMENT

NATIONALASSEMBLYBILLS,2026

NAIROBI,2ndApril,2026

CONTENT

| Bill for Introduction into the National Assembly- | Bill for Introduction into the National Assembly- | |-----------------------------------------------------|-----------------------------------------------------| | | PAGE | | The Income Tax(Amendment) Bill,2026 | 833 |

THEINCOMETAX(AMENDMENT)BILL,2026

A Bill for

AN ACTof Parliament to amend the Income Tax Act and for connected purposes

ENACTED by theParliament of Kenya,as follows

PARTI-PRELIMINARY

• 1.This Act may be cited as the Income Tax (Amendment) Act,2026.
• 2.Section 7of theIncome Tax Act (hereinafter referred to as the"principal Act") is amended in subsection (1) by inserting the following new paragraph immediately after paragraph (b)-
• (c) notwithstanding paragraphs (a) and (b), a transfer of property by a company to its shareholders under paragraph 6(2) (i) of the Eighth Schedule shall not be deemed to be a distribution for the purposes of this Act.
• 3.The Eighth Schedule to the principal Act is amended in item 6
• (a) by inserting the following new subparagraph immediately after subparagraph (2) (h)
• (i) by the transfer of property by a company to its shareholders as part of internal reorganisation,or on the transfer of property to thecompany by theshareholders as consideration for the transfer pursuant to this paragraph,provided that
• (I) the property is transferred to the shareholders in proportion to their shareholdingin the company immediately before the transfer; and
• (ll)where the property consists of shares,such sharesrelateto asubsidiary ofthe companyundertaking the transfer.
• (b) by inserting the following sub paragraph
• immediately after subparagraph (2)
• (2A) For the purposes of this subparagraph internal reorganization means a restructuring of the ownershipor control of a company or its assets which does not involve a transfer ofproperty to a
• third party.

Short title.

Amendment of section7of Cap. 470.

Amendment ofEighth Scheduleto Cap.470.

MEMORANDUM OFOBJECTSAND REASONS

Statement of the Objects and Reasons for the Bill

The principal object of this Bill is to amend the Income Tax Act to provide for exemption of capital gains tax in the transfer of property by a company to its shareholders as part of an internal reorganization, or on the transfer of property to the company by the shareholders as consideration

for the transfer.

Statement on the delegation of legislative powers and limitation of

fundamental rights and freedoms

This Bill does not delegate legislative powers to the Cabinet Secretary and does not limit fundamental rights and freedoms.

Statement of how the Bill concerns county governments

The Bill does not concern county governments in terms of Article 110(l) ofthe Constitution.

Statement as to whether the Bill is a money Bill within the meaning of Article 114 of the Constitution

The enactment of this Bill may occasion additional expenditure of public funds.

Dated the 2nd April, 2026.