Finance Bill 2026 Sparks Questions Over Kenya’s New Phone Tax Plan

The Finance Bill 2026 has sparked debate over claims that Kenya is introducing a new 25% tax on mobile phones. But according to Treasury CS John Mbadi, the proposal is not about adding a new tax it is about replacing several existing charges with one simplified levy.

He says currently, imported phones already attract multiple taxes and fees. These include 16% VAT, 10% excise duty, 25% import duty, a 2.5% import declaration fee, and a 2% railway development levy. Combined, the total tax burden can reach roughly 55.5% of a phone’s value, although most consumers never notice because the cost is already built into the retail price.

Under the proposed system, VAT, import duty, the import declaration fee, and the railway levy on phones would be removed and replaced with a single 25% excise duty. On paper, that would mean a lower overall tax burden than what exists today.
The proposal would also change when the tax is paid. Right now, importers settle most taxes at the port before selling the phones. The new plan would instead charge the tax when a phone is activated for use which he argues could ease cash flow pressure on traders and importers.

The main concern now is not just the rate itself, but how the system would work in practice. Tax experts are questioning who would collect the activation tax: telecom companies, importers, or dealers. That uncertainty is what could ultimately determine whether phone prices actually fall, stay the same, or rise for consumers.