NAIROBI, Kenya, June 19 – Kenyans have been spared higher costs on mobile money transactions and smartphones after Parliament rejected proposals to introduce a 16 percent Value Added Tax (VAT) on peer-to-peer mobile money transfers and a 25 percent excise tax on mobile phones.
In amendments to the Finance Bill 2026 approved by the National Assembly, MPs dropped the proposed VAT on person-to-person mobile money transfers, citing concerns that it would increase the cost of sending money and undermine financial inclusion.
Industry players, including the Kenya Bankers Association, Safaricom and Airtel Kenya, had opposed the proposal, warning that it would discourage the use of digital financial services.
However, companies involved in providing mobile money services will still be subject to the proposed 16 percent VAT under the revised bill.
Lawmakers also removed a proposal to impose a 25 percent tax on mobile phones, a move that would have significantly increased the cost of acquiring smartphones.
The decision comes as the government seeks to expand digital access and connectivity across the country. Recent industry data shows smartphone penetration in Kenya has reached 92.9 percent.
The Finance Bill 2026 now awaits assent by William Ruto before it becomes law.
A total of 122 Members of Parliament voted in support of the bill, while 40 opposed it. No legislator abstained from the vote.
The rejection of the two proposals is expected to be welcomed by consumers, digital lenders, telecommunications firms and businesses that rely heavily on mobile money transactions for day-to-day operations.
