Nairobi – A proposal in the Finance Bill 2026 seeks to impose a 25 percent excise duty on mobile phones. This initiative could significantly reduce the affordability of smartphones for millions of low-income Kenyans and informal workers who rely on these devices for business, education, and access to government services. The proposed amendment to the Excise Duty Act would apply the tax to any telephone used on a cellular or wireless network, with the duty payable upon the device’s first activation rather than at the point of import or sale. Treasury officials assert that this approach aims to close loopholes and ensure that every active device is included in the tax system.
Critics caution that the timing of this levy may create compliance challenges regarding who—telecom operators, importers, or distributors—should be responsible for remitting the tax. If enacted, the cost of a basic smartphone, currently priced around Sh10,000, could rise to over Sh12,500, excluding existing value-added tax, import duties, and dealer margins. This price increase coincides with the government’s push to accelerate the digitization of public services, education, banking, and commercial transactions. The excise duty is part of a broader revenue-mobilization initiative in the Finance Bill, which aims to generate an additional Sh120 billion in new tax measures for the 2026/27 fiscal year, with overall tax collections projected to reach Sh2.985 trillion starting in July.
For many Kenyans in the informal sector, smartphones have become essential tools for trade. Boda-boda riders utilize navigation and ride-hailing apps, market traders rely on mobile banking and inventory management, and online freelancers need affordable internet-enabled devices to access digital marketplaces. Mobile penetration and the mobile-money ecosystem have long been recognized as key drivers of Kenya’s economic growth. Increasing smartphone prices could hinder internet adoption, undermine financial inclusion, and obstruct the expansion of e-government services such as eCitizen, online tax filing, and digital payments.
The proposal has also raised concerns among consumers who import refurbished or second-hand phones. While the Finance Bill includes tax incentives for electric bicycles, buses, and other green technologies, the new mobile-phone levy has been criticized as contradictory to Kenya’s ambition to establish itself as a regional technology and innovation hub. Stakeholders warn that higher device costs could exacerbate the digital divide, particularly affecting young people, low-income earners, and households in rural areas. As the bill progresses through parliamentary debate, the balance between revenue generation and digital inclusion is likely to remain a key focus for both policymakers and the public.
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