Kenya Scraps Proposed Mobile Phone and M-Pesa Taxes in 2026 Finance Bill
Nairobi, 25 May 2026
Kenya’s Treasury has confirmed that the Finance Bill 2026 will not impose new taxes on mobile phones or M-Pesa services, delivering crucial relief to millions of users. The decision particularly benefits refugee communities in Kakuma and Kalobeyei camps, where mobile money transfers are essential for receiving remittances and conducting daily transactions. The bill also withdraws several controversial proposals from the previously rejected 2024 Finance Bill, including VAT on bread and motor vehicle circulation taxes, whilst clarifying existing digital payment regulations rather than creating new levies.
Treasury Clarifies Tax Withdrawal After Public Misinformation
The National Treasury’s clarification on 24 May 2026 comes amid widespread misinformation circulating on social media platforms about the Finance Bill 2026’s contents [1]. The government specifically dismissed claims of a proposed 5 per cent withholding tax on digital content monetisation, which had sparked concern amongst content creators and digital service users [1]. This announcement represents a significant departure from the approach taken in the previously withdrawn Finance Bill 2024, which had proposed sweeping tax increases that ultimately led to public outcry and legislative rejection. The Treasury’s decision to exclude mobile phone and M-Pesa taxes from the 2026 bill demonstrates a more cautious approach to digital taxation following the political turbulence surrounding the earlier proposals.
Specific Proposals Removed from 2026 Bill
Several controversial measures from the withdrawn Finance Bill 2024 have been definitively excluded from the 2026 version, providing clarity for consumers and businesses alike [1]. The eco levy on phones, which would have increased device costs, will not appear in the new bill, alongside the removal of VAT on bread and a proposed motor vehicle circulation tax [1]. Mobile money data access fees, which would have directly affected M-Pesa transactions, have also been scrapped [1]. The proposed 5 per cent PAYE reduction tied to exempting the first Sh30,000 of income has been withdrawn for further review, indicating the Treasury’s commitment to thorough consultation on tax policy changes [1]. These withdrawals collectively represent a more measured approach to revenue generation that acknowledges the economic pressures facing Kenyan households.
Digital Payment Clarifications Rather Than New Taxes
Rather than introducing new digital taxes, the Finance Bill 2026 focuses on clarifying existing tax rules affecting digital payment and card transaction fees [1]. The proposed changes are specifically intended to address legal loopholes identified in previous court rulings, particularly regarding withholding tax on card transaction fees [1]. The taxation efforts are being redirected towards digital financial intermediaries rather than traditional banking services, representing a strategic shift in how the government approaches fintech regulation [1]. This approach suggests the Treasury recognises the importance of maintaining Kenya’s position as a regional leader in mobile money innovation whilst ensuring appropriate tax compliance from financial service providers.
Relief for Refugee Communities Amidst Ongoing Development Efforts
The decision to exclude mobile phone and M-Pesa taxes provides particular relief for refugee communities in camps like Kakuma and Kalobeyei, where mobile money services are essential for daily survival and economic participation [GPT]. These communities rely heavily on digital financial services for receiving remittances from family members abroad and conducting transactions within the camp economy, making any additional fees potentially devastating for already vulnerable populations [GPT]. The timing of this tax relief coincides with ongoing peacebuilding efforts in refugee-hosting areas, as demonstrated by recent conflict prevention and peacebuilding training sessions organised in Kakuma, which brought together refugee-led organisations and community groups to strengthen social cohesion [2]. This comprehensive approach to supporting refugee communities combines financial accessibility with peace and development initiatives, creating a more stable environment for both refugees and host communities.