CS Mbadi Says Phones Will Be Cheaper Despite 25% Tax Changes in Finance Bill 2026

CS Mbadi Says Phones Will Be Cheaper Despite 25% Tax Changes in Finance Bill 2026

Treasury Cabinet Secretary John Mbadi has defended the government’s proposed tax reforms on mobile phones under the Finance Bill 2026, dismissing claims that the changes will make smartphones more expensive for Kenyans.

Speaking during an interview on TV47 at the University of Nairobi on May 20, Mbadi said the proposed changes are aimed at simplifying taxation in the mobile phone sector while easing financial pressure on traders and importers.

The CS explained that the Finance Bill 2026 seeks to replace multiple taxes currently imposed at the port of entry with a single 25 per cent excise duty that would only apply once a phone is sold and activated on a mobile network.

“People are saying we are increasing excise duty from 10 per cent to 25 per cent, making mobile phones more expensive. Far from it. These are the facts,” Mbadi stated during the interview.

Currently, mobile phone importers in Kenya are subjected to several charges before devices even enter the retail market. These include a 16 per cent Value Added Tax (VAT), 10 per cent excise duty, 25 per cent customs duty, a 2 per cent import declaration fee, and a 2.5 per cent railway development levy.

According to Treasury estimates, the combined taxes amount to approximately 55.5 per cent of the value of the device, significantly increasing the final retail price paid by consumers.

The government now argues that the current taxation structure is overly complicated, expensive for businesses, and inefficient in terms of collection and enforcement.

Under the proposed reforms, all taxes charged at the port of entry would be removed. Instead, importers would be allowed to bring phones into the country without immediate taxation, with the 25 per cent excise duty only becoming applicable after the device is sold and activated by the end user.

The proposal marks one of the most significant changes to Kenya’s mobile phone taxation policy in recent years and is expected to attract mixed reactions from consumers, retailers, and technology stakeholders.

Mbadi maintained that the reforms are designed to simplify the tax system and improve cash flow for businesses, particularly small and medium-sized traders operating in the electronics sector.

“Number one, you are making taxes simple. Very simple, because it is one, and you don’t have to calculate VAT, what, what, along the supply chain until it reaches Jikisumu, whatever. No, one tax,” Mbadi explained.

The Treasury CS added that the new system would eliminate the burden of paying taxes on products that have not yet been sold, something he argued has been affecting business operations and locking up traders’ capital unnecessarily.

“Number two, which you are also correcting, is that if the phone has not been sold, no one is paying tax,” he added.

According to the government, the move is also intended to encourage business growth by allowing traders to retain more working capital before making sales.

Industry players have previously complained about the high upfront taxes imposed on imported electronics, arguing that the system raises prices and limits smartphone accessibility for many Kenyans, especially young people and low-income earners.

Kenya has experienced rapid growth in smartphone usage over the last decade, with mobile devices becoming central to digital banking, online learning, e-commerce, communication, and access to government services such as the eCitizen platform.

However, the proposed changes have already sparked debate online, with some Kenyans expressing fears that the 25 per cent excise duty could still result in higher retail prices if businesses transfer the costs directly to consumers.

Mbadi, however, insisted that the reforms are intended to reduce complexity rather than increase the tax burden.

According to Treasury officials, the single-tax model could also help curb tax evasion and simplify monitoring of phone sales through mobile network activation systems.

The Finance Bill 2026 is currently undergoing public participation and parliamentary scrutiny ahead of the 2026/2027 financial year budget process.

Lawmakers, industry stakeholders, consumer groups, and ordinary Kenyans are expected to submit their views before Parliament debates and potentially approves the proposed tax measures in the coming months.

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CS Mbadi Says Phones Will Be Cheaper Despite 25% Tax Changes in Finance Bill 2026