Treasury CS John Mbadi./HANDOUT
Treasury Cabinet Secretary John Mbadi has sought to allay fears that smartphone prices will increase under new tax proposals, insisting that the changes will instead simplify the tax structure and potentially reduce costs.
Mbadi says a single 25 per cent excise duty will replace multiple existing levies that currently push the total tax burden on mobile phones to about 55 per cent.
“Phone prices will not go up because we have removed all the other taxes and replaced them with one single tax,” the CS said on Monday morning at Treasury Buildings during a briefing on the 2026 Finance Bill.
The previous regime included several charges such as Import Declaration Fee, Railway Development Levy, Value Added Tax and customs duty, which the Treasury says significantly increased the final cost of mobile phones.
“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 added.
He explained that under the new proposal, the excise duty would be applied only when a phone is activated for use, rather than at the point of importation. This, he said, means importers and traders will not be required to pay tax immediately upon stocking devices.
“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 said.
Treasury says the approach is intended to strengthen tax compliance and ensure all devices used in Kenya are captured within the tax system.
However, the proposal has already drawn concern from sections of the public, with some fearing that handset prices could still rise. Mbadi dismissed such claims, insisting critics had not reviewed the Bill in detail.
“Please get the actual Finance Bill. Stop circulating fake Finance Bills,” he said.
Under the proposal, analysts have estimated that a basic smartphone currently retailing at about Sh10,000 could cost more than Sh12,500 before additional charges such as VAT, import costs and dealer margins.
Kenya remains one of Africa’s most mobile-connected countries, with phones playing a central role in daily transactions, including payments and money transfers.
By the end of 2025, there were 73.2 million active mobile devices on the network, with smartphone penetration surpassing 80 per cent, equivalent to about 41.4 million devices.
More than 40 million Kenyans also rely on mobile money services, which continue to drive demand for mobile phones.
