Nairobi — Private Sector Alliance (KEPSA) has cautioned the government against imposing new taxes on mobile banking, warning they could disrupt financial flows and weaken the tax base instead of expanding it.
The Kenya Private Sector Alliance argues that taxing mobile banking services risks pushing transactions into informal channels where they become difficult to track and tax.
"You tax digital payment platforms, you drive consumers to the mattress and to the informal economy," a KEPSA representative said, warning that such a shift would ultimately undermine government revenue collection.
The advisory is part of the business sector's memorandum to their Parliamentary Budget and Appropriations Committee which has been conducting a public hearing on the 2026 Finance Bill.
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National Treasury Cabinet Secretary John Mbadi has defended the proposals in taxation law as efforts to simplify taxation rather than introduce new burdens
The private sector noted that the contested tax measures are projected to generate between KSh35 billion and KSh90 billion, significantly lower than alternative proposals they have put forward.
Among these is a suggested 5 percent reduction in Pay-As-You-Earn (PAYE) tax, which KEPSA says could stimulate economic activity, generating between KSh210 billion and KSh280 billion in output while creating up to 36,000 jobs within a year.
KEPSA also urged the government to zero-rate mobile money transfers such as peer-to-peer transactions, arguing that these do not constitute value addition and should not attract Value Added Tax.
The debate unfolds as the government rolls out a KSh3.3 trillion budget for the 2025/2026 financial year, with pressure mounting to balance revenue collection with economic sustainability.
By Spencer Alela
