Safaricom warns of higher M-Pesa charges under Finance Bill 2026

Safaricom has urged the National Assembly’s Finance and Planning Committee to reject a Finance Bill 2026 proposal that would subject payment processing fees to 16% VAT. The company argues that while the tax is technically aimed at payment service providers, the extra cost would ultimately be passed on to consumers through higher transaction charges.

The proposal would remove the VAT exemption currently enjoyed by licensed payment service providers such as M-Pesa, Airtel Money, and Pesapal. This means the fees these platforms charge for processing transactions would become subject to VAT.
The National Treasury maintains that the tax is intended for the payment platforms rather than their customers. According to Treasury, payment service providers are the ones supplying a taxable service through their payment infrastructure, while individuals sending money are not supplying any service and therefore remain outside the scope of the tax.

Safaricom’s Simulation
To illustrate its concerns, Safaricom presented a simulation based on a KES 5,000 M-Pesa transfer. The transaction currently attracts a fee of about KES 49.57. Today, the customer pays an additional 15% excise duty on that fee (KES 7.43), bringing the total KES 57. If the proposed VAT is introduced, an additional KES 9.12 would be charged, increasing the total transaction cost to KES 66.12. Safaricom argues that because the VAT would be applied to a fee that already attracts excise duty, the effective tax burden on the transaction fee would rise from 15% to 33.4% which would make digital payments more expensive and increase costs for millions of Kenyans who use M-Pesa for everyday transactions.