KRA boss Ndiritu Muriithi explains plan to tax phones at SIM card activation

Kenya Revenue Authority (KRA) Chairperson Ndiritu Muriithi defended a plan to impose a 25% tax on mobile phones at the time of SIM card activation. Muriithi argued that the tax would curb tax evasion by large importers who were using consolidated cargo arrangements to evade taxes on high-value goods, including mobile phones. He provided an example using a phone he held during a media engagement, stating that the import duty on such a phone, which could be Ksh 20,000, would amount to Ksh 2 billion if multiplied by the number of phones carried in a container.

Muriithi claimed that some large importers were hiding the true origin of the phones by importing them through small traders in markets like Gikomba and Kirinyaga Road. He questioned why traders sharing shipping containers could not be taxed separately for their individual consignments. Muriithi proposed the activation-based tax system as a way to address loopholes in mobile phone imports and distribution, arguing that it would eliminate deception and ensure that taxes were collected where the phones were actually used.

However, the proposal was rejected by the National Assembly's Finance Committee, which cited implementation challenges and concerns about phone affordability. President Ruto announced plans to remove the 25% import duty on mobile phones to make them more affordable and expand economic opportunities, but the removal requires legal and regional customs changes.