The National Treasury has reversed its stance on the proposed elimination of the 25 percent import duty on mobile phones, a move that means Kenyans will continue to purchase mobile devices at high prices.
Initially, the government had planned to scrap the import duty along with the 16 percent Value Added Tax (VAT), the 2.5 percent Import Declaration Fee (IDF), and the 2 percent Railway Development Levy (RDL). This move would have left mobile phones subject only to the 25 percent excise duty, which was recently hiked from 10 percent.
However, when Treasury Cabinet Secretary John Mbadi presented the budget statement to Parliament on Thursday, he only confirmed the removal of the other levies but omitted the plan to waive the 25 percent import duty. Instead, Mbadi stated that Kenya has submitted a proposal to the East African Community (EAC) seeking permission to eliminate customs duties on raw materials and spare parts used in the local assembly of smartphones.
While this strategy aims to protect the local mobile assembly sector, it guarantees that fully built imported smartphones will remain expensive. He added that increasing access to affordable communication devices would enable more Kenyans to participate in the digital economy and benefit from new business and innovation opportunities.
The Ministry had previously defended its decision to raise the excise duty on phones to 25 percent by promising to slash alternative taxes to simplify the tax regime. However, because Kenya is a member state of the East African Community, it cannot unilaterally scrap import duties. Instead, it must request the EAC Council of Ministers to grant the waiver in alignment with the country’s fiscal and economic objectives.
According to CS Mbadi, the tax amendments were submitted to Parliament on May 8 and subsequently forwarded to the EAC on May 15, but the request to drop the import duty on fully built phone imports was not included.
