A proposal in Kenya's Finance Bill 2026 to collect tax on mobile phones at the point of activation has triggered sharp debate during the ongoing public hearings on the bill. The plan, which would tie a levy to the moment a handset is switched on for use, has drawn differing positions from the country's revenue and treasury arms.
The proposal seeks to amend Section 36 of the Excise Duty Act so that 25% is paid to the Kenya Revenue Authority by the time a mobile phone is activated. The change would shift the point at which the tax is captured to the moment a device becomes usable.
The clause came up for debate as the Kimani Kuria-led National Assembly Finance Committee took submissions on the bill. The hearing brought together officials defending and questioning the workability of the measure.
KRA officials insisted that the move would lead to more tax revenue, presenting it as a way to widen collection. The National Treasury, however, held that amending the clause would have serious implications for Kenyans, signalling caution over the proposal.
Members of the committee tasked the revenue authority to explain how it would follow up and ensure that the millions of Kenyans who own mobile phones are compliant. The question of enforcement at such a scale was a central concern during the exchange.
According to the explanation offered, a phone can be kept unused without attracting any tax. But once the owner inserts a SIM card and the phone is set up for use, its number would be checked against what officials described as a whitelist of phones whose taxes have been paid; if it is on the list, the SIM card is replaced and works, and if it is not, the owner has to pay the tax that is due.
When asked how this would apply to someone who buys a phone without a PIN, the authority said the final consumer does not necessarily need one, because the levy is a consumption tax and a final tax that still comes through the system. Officials said there was room to build the mechanism so that it works in practice.