The Kenya Bankers Association (KBA) has pushed back against a proposal in the Finance Bill 2026 seeking to impose a 16 percent Value Added Tax (VAT) on fees charged by digital payment and money transfer platforms, warning that the move could reverse gains made in financial inclusion and digital payments.
Speaking during public participation hearings organized by the Kenya Private Sector Alliance (KEPSA) before the National Assembly Finance Committee, KBA Chief Executive Officer Raimond Molenje said the tax would push more Kenyans back to cash transactions and the informal economy, ultimately undermining government revenue collection efforts.
"You tax digital payment platforms, you drive consumers to the mattress and to the informal economy. Government cannot be able to collect revenue in that type of system," said Molenje.
"If they want the formal systems to help them mobilize taxes, then we need to reduce the cost on payments."
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The Finance Bill 2026 proposes subjecting fees charged by mobile money and digital payment platforms such as M-Pesa and Airtel Money to 16 percent VAT, a move that would raise the cost of transactions for millions of users if approved by Parliament.
Treasury has argued that the proposal seeks to harmonize taxation across digital financial services and broaden the VAT base amid growing use of mobile money platforms in the economy.
However, bankers and private sector lobby groups say the levy risks discouraging electronic transactions at a time when Kenya has emerged as one of Africa's leading digital payment economies.
KBA argued that lowering transaction costs would instead encourage more digital payments, enhance traceability of transactions and widen the tax net through increased economic activity.
The proposed tax has also triggered concerns among consumers over rising transaction costs, especially for low-income households that rely heavily on mobile money for daily transfers and small business payments.
Kenya's mobile money ecosystem processes trillions of shillings annually and remains central to the country's financial inclusion agenda.
According to KNBS Economic Survey 2026 data, the value of person-to-person mobile money transfers rose to Sh8.66 trillion in 2025, underscoring the growing importance of digital payments in Kenya's economy.
The proposal comes as the government seeks additional revenue measures under the Finance Bill 2026 to support fiscal consolidation and reduce pressure on public debt.
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Treasury has, however, clarified that the Bill does not contain any clause granting the Kenya Revenue Authority access to personal mobile money transaction data, following public concern over digital privacy.
