KRA Board Chairperson Ndiritu Muriithi said the tax authority wants to shift mobile phone taxation from the border to the point when a SIM card is activated, arguing that the current border collection is ineffective.

Muriithi claimed organised importers use consolidated cargo arrangements to hide high‑value handsets among low‑value goods, allowing large shipments to evade taxes that could total billions of shillings.

He cited a recent KRA operation in September 2026 that intercepted 55,607 basic smartphones, of which only 3,000 were declared, along with 309 undeclared premium devices and an estimated KSh 56 million in under‑declared taxes.

The Finance Bill 2026 sought to replace the existing multi‑layered mobile phone tax regime – 16% VAT, 10% excise duty, 25% import duty, IDF and railway levy – with a single 25% excise charge triggered at activation.

Parliament’s Finance and National Planning Committee rejected both the 25% rate and the activation trigger, warning that it could undermine digital inclusion, deter ICT investment and create compliance uncertainty.

Following the committee’s decision, the activation‑based tax was removed from the Finance Act 2026, meaning the existing 10% excise duty on mobile phones continues to be collected at import or local manufacture.

The Treasury indicated that any future activation‑based framework would need regulations from the Communications Authority of Kenya to resolve issues such as double taxation, treatment of second‑hand devices and privacy concerns over linking IMEI numbers to tax records.