07/05/2026
The Finance Bill 2026 has introduced a new tax rule targeting importers of second-hand clothes (mitumba), worn footwear and other worn articles under tariff heading 6309. Under the new Section 12H of the Income Tax Act, a deemed profit of 5% of the customs value will now be used to calculate income tax on these imports.For companies, this deemed profit is taxed at the flat corporate rate of 30%. For individuals (sole proprietors), the deemed profit is taxed at the graduated (progressive) income tax rates. The tax is payable at the point of importation (before the goods are released by Customs) and is treated as a final tax.This change is expected to take effect from 1 July 2026.
Step 1 – Determine your deemed profit
The law assumes your taxable profit is 5% of the customs value of the goods.
Example: Customs value = KES 1,000,000
Deemed profit = KES 1,000,000 × 5% = KES 50,000
Step 2 – Apply the corporate income tax rate (same for all companies)
The corporate tax rate is 30%
Tax payable = KES 50,000 × 30% = KES 15,000
Step 3 – Pay before release
This is a final tax – no separate income return needed.
Payable upon importation and prior to release of goods.
