The committee, chaired by Molo MP Kuria Kimani, tabled its report in Parliament after weeks of public participation and consultations with stakeholders across the country.
While the government had hoped to strengthen revenue collection through a series of tax measures, lawmakers opted to shield taxpayers and businesses from what they termed burdensome provisions.
Among the proposals rejected was a plan that would have allowed the Kenya Revenue Authority (KRA) to issue agency notices and access taxpayer funds even when tax disputes were still under appeal.
The committee also opposed a proposal to change the taxation point for mobile phones to the moment they are activated on a network, saying the move would create confusion and compliance challenges for consumers and service providers.
In another relief for businesses, lawmakers rejected a proposal requiring companies to distribute up to 60 percent of retained earnings as deemed dividends.
They warned that the measure would limit investment and business expansion opportunities.
The developments come at a time when the government is under pressure to increase domestic revenue while avoiding a repeat of the public backlash witnessed during previous Finance Bills.
Opposition leaders and civil society groups have already intensified scrutiny of the 2026 tax proposals, arguing that Kenyans are still struggling with the high cost of living.
As Parliament prepares for the final stages of debate, the committee’s recommendations signal growing resistance to aggressive taxation measures and could force the Treasury to rethink its revenue strategy for the 2026/27 financial year.
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