Kenya Wants a 25% Tax on Every Phone. Traders Are Bracing for the Worst.

Kenya's Finance Bill 2026 puts a 25% excise duty on mobile phones. The Treasury says it is just bundling old taxes into one. Traders, importers, and the people who run shops on a smartphone are not buying it.

The proposal in plain words

The Finance Bill 2026, tabled before Kenya's National Assembly this month, adds a 25% excise duty on mobile phones that connect to cellular or wireless networks. The Bill is being heard by the Departmental Committee on Finance and National Planning, chaired by Molo MP Kuria Kimani.

The tax has one twist. It is not paid when the phone enters Kenya. It is paid the moment the phone is activated on a network. That means importers and shop owners do not pay tax on stock sitting in a warehouse. The tax hits when a customer turns the phone on.

Parliament has opened the Bill for public participation. Written submissions must reach Parliament Buildings in Nairobi by 5pm on May 25, 2026, either in person or by official email.

What the Treasury is promising

Treasury Cabinet Secretary John Mbadi has gone on record to defend the 25% rate. According to Capital FM, he said, "Phone prices will not go up because we have removed all the other taxes and replaced them with one single tax."

The Treasury says imported phones already carry a cumulative tax burden of roughly 55%. That stack, according to Mbadi, includes the Import Declaration Fee, the Railway Development Levy, VAT, and customs duty. The new 25% excise is meant to replace those layers, not sit on top of them.

Mbadi also pushed back on a separate rumour that the Bill would let the government read M-Pesa transaction data. He told local press that no such provision exists in the Bill.

Why critics say prices will jump

Industry voices and digital rights groups read the same Bill differently. They worry the 25% excise is being added at a different stage in the supply chain than the levies it claims to replace. If the old levies stay in place at the port and the new excise lands at activation, that is not consolidation. That is a fresh layer.

Coverage by allAfrica, syndicating Kenyan dailies, used a worked example. A phone retailing at Sh10,000 today could move past Sh12,500 once the 25% is applied, before existing VAT and other import charges are recalculated. Multiply that across the millions of smartphones Kenya imports each year and the gap between Treasury's promise and the till receipt becomes the real argument.

The other risk is timing. Kenya's smartphone penetration is still growing. Anything that nudges a Sh8,000 entry-level phone closer to Sh10,000 will lock more first-time buyers out, especially in rural counties.

The mobile money problem

For a Nairobi market trader or a Kisumu boda boda rider, a smartphone is not a luxury. It is a till, a customer service line, a supplier WhatsApp group, and a mobile money wallet rolled into one. M-Pesa runs on it. Stock orders go through it. Customers find shops on it.

If the entry price for a smartphone moves up by even 15 to 20 percent, the people most affected are the ones with the smallest margins. A shop owner using an old keypad phone wants to move to mobile money. A used-clothes seller wants to start posting stock on TikTok. A salon owner wants to take card payments through a phone app. The phone is the door to every one of those upgrades.

The proposal also lands at the same time the Bill is reshaping the mitumba trade through a separate 5% deemed-profit tax on imported second-hand clothes. Two of the most common ways a small Kenyan business reaches its customers, the phone and the mitumba bale, are both in the firing line in one Bill. The mitumba angle is covered in our earlier breakdown of the Kenya mitumba tax.

What shop owners can do now

The Bill is not law yet. The public participation window is open until May 25, 2026. Anyone who runs a shop, sells phones, or relies on mobile money can file a written submission to Parliament. Submissions can go in person to Parliament Buildings or to the official parliamentary email addresses listed on the National Assembly website.

Traders should also watch how stockists price phones in the next few weeks. If wholesalers start hedging by raising landed costs ahead of the Bill, shop owners will see it on supplier invoices before any law passes.

The full Bill is on the Parliament of Kenya website. The Departmental Committee on Finance and National Planning is the one collecting views.

Why This Matters

This is not just a Kenya story. Every African government watching its tax base looks at smartphones the same way. They are everywhere, they are imported, and they are easy to tax. Tanzania, Uganda, and Nigeria have all tried versions of phone or SIM levies in the past five years. What Kenya passes in 2026 will set the tone for the region.

For an African small business owner, the smartphone is the single piece of equipment that connects you to suppliers, customers, mobile money, and government services. Pricing it out of reach is not a small policy detail. It is a tax on how a shop is actually run today.

Conclusion

Kenya's Treasury says the 25% excise is a clean-up. Critics say it is a fresh charge dressed up as a fix. The answer will show up in supplier prices long before it shows up in Hansard. Traders have until May 25 to be heard.

Sources

• Capital FM Kenya — Finance Bill 2026: CS Mbadi Says 25pc Phone Levy Won't Affect Smartphone Access (May 11, 2026)
• Capital FM Kenya — Parliament Invites Public Views on Finance Bill 2026 (May 11, 2026)
• allAfrica — Kenya: Smartphones May Become Luxury Items Under New Finance Bill Tax (May 11, 2026)
• Kenyans.co.ke — Treasury Explains 25% Excise Duty on Smartphones in Finance Bill 2026
• Kenyans.co.ke — Finance Bill 2026 Targets Phones, Betting Wins, Mitumba and Digital Payments