04/06/2026
*EXPOSING CS John Mbadi ON MISLEADING* Kenyans on phone prices in the Finance Bill.
_I have gone through:_
- the Finance Bill,
- the VAT Act,
- the Excise Duty Act.
_And the truth is shocking._
Phone prices are unlikely to fall the way Kenyans have been told.
Mbadi and UDA bloggers have been all over social media saying:
"Read the bill."
"VAT on phones has been removed."
"Taxes have been compressed into one tax."
But after reading the ACTUAL laws, that is NOT what is happening.
Let us start with the CURRENT law.
Under the current VAT Act:
Section 5(1)(b):
VAT is charged on imported taxable goods.
Section 5(2)(b):
VAT rate is 16%.
This means imported phones currently attract VAT.
When an importer sells a phone, the VAT is transparently recovered from the buyer and appears on the receipt. For example, if I import a phone worth 100k , tax will be 16k . So when I sell it at my shop, I will sell it at 116k minimum and recover the 100 k I used to import and 16k I paid as tax
NOW, let us go to PAGE 14 of the Finance Bill.
Clause 31.
The bill inserts:
"The supply of imported or locally purchased telephones for cellular networks and other wireless networks."
At this point, many people stopped reading and started celebrating.
But here is what they missed.
That clause is inserted under the VAT EXEMPT schedule.
NOT zero-rated.
And that difference matters.
ZERO RATED means:
- no VAT charged to the consumer;
So if I import a phone worth 100k , vat will be zero, so I can sell it at 100 to recover the money I used to import, so the phone becomes cheaper
VAT EXEMPT means:
- businesses may lose VAT recovery/input-offset rights.
This means VAT-related costs incurred across the supply chain can become embedded business expenses.
And what do businesses do with costs?
They pass them on to consumers.
This means that the VAT cost does not necessarily disappear economically. It can simply become hidden inside the final price instead of appearing clearly on the receipt.
So if I import a phone worth 100 k , I will be slapped with vat costs etc and can't write in receipt that there was vat, it's now part of my expenses. And so by the phone gets to the shop it's 116k like first example. The vat is there but hidden
NOW, let us go to PAGE 19.
Clause 36.
This is where the bill changes excise duty on phones.
Old rate:
10%.
NEW proposed rate:
25%.
TWENTY FIVE PER CENT.
Now, here is the question nobody is answering.
Yes, the bill appears to remove IDF and RDL on phones.
But together those taxes are only about 4.5%.
At the same time, Excise Duty is being increased from:
10% to 25%.
That is a 15 percentage point increase in excise.
And another question:
Where exactly is Import Duty on phones being removed?
I have gone through the Finance Bill, and I have not seen a clear clause removing Import Duty on phones.
If I missed it, show me the clause, and I will gladly correct myself.
So let us summarize what is ACTUALLY happening.
The bill:
- removes IDF and RDL;
- moves phones into VAT EXEMPT status instead of zero-rating them;
- increases Excise Duty from 10% to 25%;
- does not appear to clearly remove Import Duty on phones.
In total simplistically, the taxes rise from 55% up to over 60%
So how exactly are phone prices supposed to come down?
If the government genuinely wanted cheaper phones, it could have:
- zero-rated phones;
- reduced Excise Duty;
- addressed Import Duty.
Instead, the biggest tax increase in the bill is Excise Duty.
*SOMA FINANCE BILL 26/27 WEWE* 🫵🏾🫵🏾🫵🏾
_FELIX ANDREA DCP THIKA YOUTH COORDINATOR_ 💚
