The National Treasury has moved to clarify proposed changes to mobile phone taxation under the Finance Bill 2026, with Treasury Cabinet Secretary John Mbadi insisting that the plan does not introduce a new tax but instead restructures an existing system.
Mbadi explained that the proposal introduces a single 25 per cent excise duty that would be applied when a mobile phone is activated by the end user, replacing what he described as a complex chain of taxes currently imposed at different stages of importation and distribution.
Speaking to the media on Monday, the CS said mobile phones imported into the country currently attract multiple levies at entry points, including customs duty, excise duty, VAT, import declaration fees, and the Railway Development Levy, before additional VAT charges are applied within the distribution chain.
According to him, this structure places financial pressure on traders, as taxes are paid upfront before goods are sold, limiting liquidity and increasing business costs.
Under the proposed framework, Mbadi said several of these charges — including VAT at importation, customs duty, import declaration fees, and the Railway Development Levy — would be removed and replaced with a single excise duty collected at the point of activation.
“There is no new tax. There is no additional charge. What we are doing is replacing the current fragmented framework with a single 25 per cent excise duty collected upon activation of the phone,” he said.
Mbadi further argued that the reform is intended to simplify tax administration, improve compliance, and ease operational pressure on mobile phone importers and distributors.
He also dismissed public concerns that the proposal targets digital access, maintaining that mobile phones remain critical tools for communication, education, business, and financial inclusion.
Despite the government’s clarification, the proposal has sparked public debate, with critics warning that the new structure could still translate into higher retail prices, particularly for low-income consumers who rely on affordable smartphones for daily digital services.
The Finance Bill 2026 is currently undergoing public scrutiny and is expected to be debated further in Parliament before lawmakers make a final decision on its adoption.
