Kenya’s proposed 25 per cent excise duty on smartphones under the Finance Bill 2026 has triggered sharp concern, with critics warning that the move could make digital access more expensive for millions of Kenyans who depend on mobile devices for work, education, banking, and government services.
The proposal, contained in amendments to the Excise Duty Act, seeks to introduce a levy on mobile phones and other wireless communication devices, with the tax payable once a device is activated on a mobile network rather than at the point of importation or purchase.
If approved by Parliament, analysts estimate that a basic smartphone currently retailing at around Sh10,000 could rise to over Sh12,500 before additional costs such as VAT, dealer mark-ups, and import-related expenses are factored in.
The government, however, has defended the proposal, arguing that it simplifies the current taxation framework. Treasury Cabinet Secretary John Mbadi dismissed fears that phone prices would increase, insisting that the new system replaces several existing levies.
“Phone prices will not go up because we have removed all the other taxes and replaced them with one single tax,” Mbadi said during a briefing on the Finance Bill 2026.
According to the Treasury, the previous tax structure included Import Declaration Fees, Railway Development Levy, customs duty, and VAT, which together pushed the effective tax burden on phones to nearly 55 per cent.
“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 explained.
He further noted that traders and importers would not be required to pay the levy while stocking devices. “The tax will only apply once the phone is sold and activated for use,” he said.
Despite the government’s assurances, concerns remain high among consumers, digital rights advocates, and informal sector workers. Smartphones have increasingly become essential tools for boda boda riders, online freelancers, traders, students, and small business owners who rely on digital platforms such as mobile banking, eCitizen services, online marketplaces, and mobile money transactions.
Critics argue that increasing smartphone-related costs contradicts the government’s aggressive digital transformation agenda and could slow internet penetration, particularly among young people, rural households, and low-income earners.
Kenya currently ranks among Africa’s most mobile-connected countries, with more than 73 million active mobile devices recorded by the end of 2025 and smartphone penetration surpassing 80 per cent.
The proposed tax is part of broader revenue-raising measures under the Finance Bill 2026, through which the government hopes to raise an additional Sh120 billion to support the 2026/27 budget. Debate over the Bill is expected to intensify as public participation hearings continue across the country.
