Kenya Finance Bill 2026 Smartphone tax Prices May Surge 25%

The Finance Bill proposed in Kenya is expected to increase the price of all smartphones within the country significantly since it imposes a duty of 25 percent on all mobile phones.

According to the bill that has been introduced this week, the government intends to impose an excise tax equaling 25 percent of the excisable value of smartphones and mobile devices operating in cellular or wireless connections.

Kenya Finance Bill 2026 smartphone tax, The proposed tax will come in addition to the current tax rate, which includes 16 percent VAT, among other charges imposed on imports.

Factors That Can Lead to an Increase in Smartphone Prices

The proponents of the tax have expressed their concerns about an eventual sharp rise in the price of smartphones due to the introduction of the tax. According to them, affordable Android smartphones, which constitute popular smartphones among low- and middle-income earners in Kenya, can see their retail prices surge.

Kenya has been experiencing sharp rises in the prices of smartphones because of:

Currency devaluation
Expenses of importing
Taxation
Strict regulation of unofficial imports

As per reports, smartphone prices in Kenya have increased from around KSh5,955 in 2019 to almost KSh19,000 by mid-2025.

With the proposed extra 25%, experts feel that the prices may spike further.

Importance of the Tax Outside the Smartphone Industry

Smartphones are vital in the digital economy of Kenya.

Kenyans use their smartphones for the following purposes:

Mobile banking
Remote jobs and freelance opportunities
E-learning
Digital government services
Social media business
Access to cryptocurrency and fintech services

Moreover, Kenya has carved a niche for itself globally when it comes to its reputation for being one of the most advanced mobile money economies in Africa, mainly powered by Safaricom’s M-Pesa network.

Buy-Now-Pay-Later Smartphone Financing May Be Affected

The likelihood exists that the newly proposed tax may affect the fast-growing market for smartphone financing in Kenya.

Organizations like M-KOPA, Watu Simu, and Safaricom’s Lipa Pole Pole have ensured that many individuals acquire smartphones through buy-now-pay-later schemes.

It is anticipated that rising expenses will prompt more defaulters in payments and fewer uses of smartphones by poor families.

Another concern is that many individuals will choose:

Used smartphones
Refurbished gadgets from foreign countries
Unregulated gadgets

Such actions may ultimately culminate in reduced sales of smartphones and thus less revenue generation for the government.

Digital Kenya Strategy Under Threat

The smartphone tax is being introduced when the Kenyan government is actively working towards:

Digitization of governmental procedures
Innovations in AI
Broadening its 4G and 5G coverage
Promoting cashless transactions
Introducing e-taxation systems

Critics have pointed out that taxing smartphones would go against the objectives of digitalization.

While telecommunications firms have made significant investments in establishing fast mobile connections, it is stated that affordable smartphones are necessary for adoption.