Finance Bill 2026: CS Mbadi Says Proposed 25% Excise Duty on Mobile Phones Is Not a New Tax

mbadi budget briefcase

Treasury Cabinet Secretary John Mbadi has moved to calm growing concerns over the proposed 25 per cent excise duty on mobile phones under the Finance Bill, 2026, insisting that the measure does not introduce a new tax on smartphones but rather simplifies the current taxation structure.

In a clarification issued by the National Treasury on Monday, Mbadi said public debate surrounding the proposal had created the impression that the government was imposing an additional tax burden on Kenyans, particularly youth and digital entrepreneurs who heavily rely on mobile devices. However, he maintained that the proposal seeks to consolidate multiple taxes already charged on phones into a single levy.

“Public discussion has particularly focused on the proposed 25% excise duty on mobile phones, with some commentary framing the proposal as taxation targeting youth, digital access and online livelihoods,” the Treasury said in a press statement.

According to the Treasury, mobile phones are already subject to several taxes and levies during importation and distribution. These include 16 per cent Value Added Tax (VAT), 10 per cent excise duty, 25 per cent import duty, a 2.5 per cent Import Declaration Fee and a two per cent Railway Development Levy.

“These taxes and levies cumulatively create an aggregate tax burden of approximately 55.5% within the current mobile phone taxation framework,” Mbadi said.

The CS explained that the Finance Bill 2026 proposes replacing the current fragmented framework with a single 25 per cent excise duty that would be collected when a phone is activated for use.

“On the contrary, 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,” Treasury stated.

Mbadi further argued that if the proposal is approved by Parliament, mobile phones will no longer attract 16 per cent VAT, the 2.5 per cent Import Declaration Fee and the two per cent Railway Development Levy. Additionally, the 25 per cent import duty would be scrapped.

“If enacted, mobile phones will no longer be subject to 16% VAT, 2.5% Import Declaration Fee and 2% Railway Development Levy under the proposed framework. The 25% import duty will also be removed,” the Treasury clarification read.

The Treasury insisted that the proposal should be viewed as a tax rationalisation measure rather than a fresh tax on digital access.

“The proposal was therefore primarily conceived as a tax simplification and rationalization measure rather than the introduction of a new tax on digital access,” the statement added.

At the same time, Treasury acknowledged the critical role mobile phones now play in communication, education, financial inclusion, digital jobs and online business, factors that have fueled heightened public scrutiny of the proposal.

“The National Treasury recognizes that mobile phones increasingly serve as essential tools for communication, education, financial access, online business, digital work and youth economic participation,” the statement said.