The debate has been particularly intense among young people, digital entrepreneurs, online workers, students, and smartphone users, with some commentary suggesting that the proposed 25% excise duty on mobile phones is a tax that targets digital access, online livelihoods, and youth participation in the digital economy.
Addressing the growing public debate, Cabinet Secretary for the National Treasury and Economic Planning John Mbadi acknowledged that the issue has become one of the most discussed aspects of the Finance Bill 2026.
“I want to address this issue because it keeps on recurring and coming back in the debate in social media, mainstream media, alternative media, every media has been mentioning this,” he said.
Noting with concern that “Public discussion has particularly focused on the proposed 25% excise duty on mobile phones, with some commentary framing the proposal as taxation targeting the youth, digital access and online livelihoods.”
However, Mbadi insists that the proposal does not introduce a new tax on mobile phones.
“The National Treasury wishes to clarify that the proposal does not introduce a new tax on mobile phones. Mobile phones are already subject to multiple taxes and levies during importation and throughout the supply chain before they finally reach consumers. Under the current framework, mobile phones attract a 25% Import Duty, 16% Value Added Tax (VAT), 10% Excise Duty, 2.5% Import Declaration Fee (IDF) and a 2% Railway Development Levy (RDL).” he said.
“Excise duty is not new. There is already 10%. There is 25% import duty on mobile phones. There is 2.5% import declaration fee. And finally, there is 2% railway development levy,” Mbadi explained.
Adding that “These taxes and levies cumulatively create an aggregate tax burden of approximately 55.5% within the current mobile phone taxation framework. He further added that, the Finance Bill 2026 seeks to simplify this structure with a single tax charged only when a phone is activated using its International Mobile Equipment Identity (IMEI).”
Instead of collecting multiple taxes and levies when the phone arrives in Kenya, the proposed system shifts taxation to the point when the device is purchased and activated for use.
“Immediately the phone leaves the port of entry, there are other taxes because it is followed along the supply chain until it reaches the consumer.”
He says the burden does not stop there.
“VAT will be charged at every single step. The customs duty 25%, excise duty 10%, VAT 16%, import declaration fee 2.5% and the 2% railway development levy. All that tax is charged when the phone arrives. The proposal under the Finance Bill 2026 seeks to simplify the existing structure by replacing the current fragmented framework with a single 25% excise duty collected upon activation of the phone,” Mbadi pointed out
The National Treasury’s argument is that this system affects traders long before a sale is made.
“You see the danger with that. Phones that are brought and put in the store which have not been sold, the vendor has already paid taxes, reducing their liquidity,” Mbadi said. Under the proposed framework, traders would be able to import and stock mobile phones without immediately paying multiple taxes and levies. Tax would only become payable when the phone is purchased and activated by the consumer.
If enacted, mobile phones would no longer be subject to VAT, Import Declaration Fee and Railway Development Levy under the proposed framework.
“Tell me how that makes phones more expensive than the current arrangement? We are saying we are replacing all that complicated system with a simple one. You bring the phone, there is no charge, there is no tax, there is no levy. The time the phone is bought and is being activated is when you pay one single tax,”
The Bill also contains an unrelated proposal that may benefit Kenyans travelling abroad who need to buy, gift, or upgrade their phone. The threshold for goods imported by passengers arriving from outside Kenya would increase from USD 300 (approximately KSH 39,000) to USD 2,000 (approximately Ksh 260,000). This means travellers would be able to bring back more personal purchases, gifts and other items before taxes become applicable.
