Treasury Cabinet Secretary John Mbadi has moved to allay public fears over a proposed 25 per cent excise duty on mobile phones contained in the Finance Bill 2026, insisting the measure is designed to simplify taxation and lower the overall tax load currently imposed on devices.
The proposal has sparked concern among Kenyans, with critics warning that any fresh levy on handsets could place smartphones further out of reach for low-income earners and small traders who depend on them for communication, digital payments, business operations and online learning.
However, Mbadi said the fears stem from a misunderstanding of the proposed reforms, noting that the new excise duty would replace several charges already imposed on imported phones.
He explained that the current structure includes multiple taxes such as the Import Declaration Fee, Railway Development Levy, Value Added Tax and customs duty, which together amount to a significantly higher burden.
“When you combine all the taxes together, they total about 55 per cent. We are now reducing that to 25 per cent and calling it excise duty,” Mbadi said.
The Treasury CS maintained that the revised system would not lead to an increase in retail prices, arguing that replacing numerous taxes with a single charge would instead create a clearer and more efficient framework.
“Phone prices will not go up because we have removed all the other taxes and replaced them with one single tax,” he emphasised.
Mbadi further revealed that the proposed tax would not be charged at the point of importation, but only once a device is purchased and activated for use by a customer.
“A trader stocking phones in a shop will not pay the tax immediately. The tax will only apply once the phone is sold and activated for use,” he explained.
He added that the activation-based model is intended to widen compliance by ensuring all active devices contribute to revenue collection while easing pressure on traders holding stock.
Mbadi also dismissed claims circulating online that the Finance Bill would allow authorities to access private mobile money records, saying such reports were false and misleading.
According to him, mobile money transfers do not constitute taxable income, and the Kenya Revenue Authority will not pursue people merely for sending or receiving money through such platforms.
As Parliament opens public participation on the Finance Bill 2026, Mbadi urged Kenyans to read the official proposals and avoid relying on misinformation spread online.
“Please get the actual Finance Bill. Stop circulating fake Finance Bills,” he said.