Kenya’s Proposed Smartphone Tax Sparks Fresh Debate
Treasury says the proposed 25% smartphone tax is meant to replace several existing charges on devices.
The National Treasury has defended plans to introduce a 25% excise duty on smartphones under the Finance Bill 2026, arguing that the proposal is designed to simplify taxation on mobile devices rather than increase their retail prices.
Treasury Cabinet Secretary John Mbadi said the proposed system would collapse several charges currently applied to imported phones into a single tax collected after activation. The remarks come amid public concern that the new measure could make smartphones harder to afford for many households and small traders.
According to Mbadi, the current structure subjects mobile phones to multiple layers of taxation before they even reach consumers. He said those charges collectively amount to about 55%, including VAT, customs duty, the Import Declaration Fee and the Railway Development Levy.
“When all those taxes are combined, they come to around 55%. We are reducing that to 25% under one system,” Mbadi said.
The Treasury also wants to change the timing of tax collection. Instead of charging importers immediately after devices enter the country, the proposed framework would apply the levy once a phone is activated by a user.
That approach, Mbadi explained, is intended to reduce pressure on traders holding inventory and improve tax compliance by linking the levy to active devices already in circulation.
The proposal has triggered debate online, particularly among digital economy advocates who fear additional taxes could slow smartphone adoption among lower-income users. Smartphones are widely used in Kenya for mobile banking, online work, education and access to government services.
Mbadi rejected claims that the Finance Bill gives authorities access to private mobile money transactions. He said transfers made through mobile platforms are not treated as income and insisted the Kenya Revenue Authority would not monitor ordinary peer-to-peer transfers for taxation purposes.
“Please get the actual Finance Bill. Stop circulating fake Finance Bills,” he said.
The government is now expected to defend the proposal further during parliamentary public participation hearings, where stakeholders from the technology sector, retail trade and consumer groups are likely to weigh in on the impact of the tax changes.
Beyond revenue collection, the Treasury appears to be pursuing a broader restructuring of how digital devices are taxed, with the government betting that a single-point system tied to activation could close gaps that exist under the current import-based model.
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