If you’ve spent any time in Nairobi’s industrial areas or busy markets lately, you’ve probably noticed something changing.

A scrap metal dealer in Industrial Area, who used to sell old iron sheets and car parts with little paperwork, now finds himself facing new deductions. Meanwhile, a young man who occasionally tries his luck on sports betting or lottery apps is shocked to see 20% of his winnings disappear before he can even withdraw them.

These are not isolated cases. The Finance Bill 2026 has introduced two significant new Withholding Tax (WHT) categories that are already sending ripples through specific sectors: scrap metal and gambling winnings.

Let’s break down what these changes really mean for ordinary business owners and Kenyans going about their daily hustle.

What the New Rules Actually Say

The Bill has inserted fresh provisions under Sections 10–12, 17 and 22 of the Income Tax Act (Cap. 470). Here are the key changes:

1. 1.5% Withholding Tax on Scrap Metal Sales Every sale of scrap metal now attracts a 1.5% WHT on the gross amount. This applies across the value chain – from small collectors to big recyclers. The buyer (often larger scrap yards or processors) is required to deduct this tax and remit it to KRA.

This move is clearly aimed at formalising a sector that has operated largely in cash and informally for decades.

2. 20% Withholding Tax on Gambling Winnings Gambling and lottery winnings now face a flat 20% WHT on the gross amount withdrawn. This replaces a narrower definition and includes a redefined term for “withdrawals” – meaning tax is calculated on the full cash-out, not just the profit after subtracting the original stake.

Whether you win on SportPesa, Betika or the national lottery, KRA now takes a bigger cut before the money reaches your M-Pesa.

Real Stories: How These Changes Are Hitting Kenyans on the Ground

Meet Maina, a scrap metal collector in Mathare. Every day, Maina pushes his mkokoteni around estates collecting old metals, wires and car parts. He sells to bigger yards for between KSh 8,000 and KSh 15,000 per load. With the new 1.5% WHT, he now loses KSh 120–225 per load – money that used to go toward school fees for his three children or fuel for his cart. For someone operating on very thin margins, this feels like a direct hit on his daily survival.

Meet Sheila, a young teacher in Ruiru who occasionally bets small amounts. Last month she won KSh 85,000 on a mid-week jackpot. Under the new rules, 20% (KSh 17,000) was withheld before the money reached her account. She had planned to use part of it for rent and her son’s school fees. Now she’s left wondering whether it’s still worth playing at all.

These are the human faces behind the policy. The jua kali economy and the growing betting culture are both being pulled deeper into the formal tax system.

Why KRA Is Introducing These Taxes

The government’s reasoning is straightforward:

• The scrap metal sector has long been associated with theft of public infrastructure (rails, manholes, cables) and revenue leakage.
• The gambling industry has grown rapidly, especially among young Kenyans, but contributed relatively little in tax compared to its size.
• Both sectors were operating with very low visibility to KRA.

By introducing withholding tax at source, KRA makes collection automatic and reduces the chance of evasion.

Comparison: Old Rules vs New Rules

Category	Old Position	New Position (Finance Bill 2026)	Impact on Businesses/Individuals
Scrap Metal Sales	Largely informal, minimal tax	1.5% WHT on gross sales	Reduces take-home for collectors & dealers
Gambling Winnings	15% on net winnings (in some cases)	20% on gross withdrawals	Lower actual payout for winners
Compliance Burden	Low for informal players	Higher documentation & deduction	Forces more formal record-keeping

Practical Advice for Affected Businesses and Individuals

For Scrap Metal Dealers & Jua Kali Operators:

• Keep clear records of every purchase and sale – dates, quantities and buyer details.
• Build relationships with formal scrap yards that can handle WHT deductions smoothly.
• Consider forming small groups or cooperatives to share compliance costs and negotiate better buying prices.
• Factor the 1.5% deduction into your pricing when selling.

For Betting Enthusiasts and Small Platforms:

• Understand that tax is now on the full withdrawal amount.
• Budget carefully – treat the 20% as already gone when calculating potential winnings.
• Consider spreading bets across platforms or reducing stake sizes to manage cash flow.

For All Businesses:

• Review your current operations to see if you buy or sell scrap metal indirectly.
• Update your accounting systems to correctly handle new WHT deductions.
• Speak to a tax advisor early – proper structuring can help minimise the overall impact.

The Bigger Picture

These new withholding taxes reflect KRA’s continued push to formalise previously grey areas of the economy. While the intention is to increase revenue and reduce leakages, the immediate effect is being felt by small players who operate with very little margin for error.

Many business owners understand the need for everyone to contribute. What worries them is the speed and depth of these changes while the economy is still recovering and many families are struggling with high living costs.

Final Thoughts

The introduction of 1.5% WHT on scrap metal and 20% on gambling winnings shows how quickly Kenya’s tax system is evolving. Sectors that once operated with little oversight are now firmly in KRA’s sights.

For small traders, recyclers and everyday Kenyans who bet occasionally, these changes require adjustment. The key is to stay informed, keep good records and seek professional guidance early rather than waiting for penalties to accumulate.

At Seal Associates, we are helping businesses and individuals understand and adapt to these new withholding tax rules. Whether you’re in the scrap metal trade, run a small betting shop or simply want to make sure your personal finances are protected, our team provides clear, practical advice tailored to your situation.

If these changes affect your business or income stream, now is the right time to review your position and plan properly.

Early action can save you unnecessary stress and money.

Prepared by Seal Associates Tax Advisory Team