Kenya plans to automatically block mobile phones imported without proper tax payments from activating on any network, a senior government official has announced. The move is part of a broader strategy to modernise tax collection and address the country’s domestic debt burden.
Moses Kuria, Senior Advisor to the Council of Economic Advisors at State House Kenya, revealed the initiative in a tweet clarifying his earlier comments on tax reforms. “Just like we will automatically block from activating on any network any mobile phone imported into the country with no record of having paid applicable taxes,” Kuria stated.
The announcement comes a day after Kuria outlined a series of tax reforms at the Kenya Revenue Authority (KRA) Summit 2024. These measures aim to leverage Kenya’s digital economy to expand the tax base and tackle evasion.
Kuria emphasised that the reforms would affect all payment service providers, not just M-Pesa as initially reported. “My attention has been drawn to media reports that my comments on Virtual ETRs at the KRA Summit yesterday were directed at MPESA only. This is erroneous as I meant all Payment Service Providers including Telcos and Banks,” he clarified.
The government’s plan includes integrating mobile payment platforms with the KRA’s tax collection systems. Kuria stated at the summit, “By Christmas 2024, all M-Pesa pay bills will also serve as virtual ETRs [Electronic Tax Registers] for KRA purposes. We are going to implement this. There will be nowhere to hide for anybody.”
Kenya’s push for digital tax collection is driven by the need to address its significant domestic debt. According to Kuria, nearly 30% of Kenya’s tax revenue currently goes towards servicing interest on domestic loans.
“This year, we will pay KES 750 billion in interest on domestic debt alone. That’s around $6 billion, and it’s catastrophic,” Kuria said at the summit. He stressed the urgency of reducing domestic borrowing by increasing tax revenue.
The reforms also aim to address what Kuria described as a “social justice issue” in Kenya’s current tax system. He highlighted the disparity between formal and informal sector workers in terms of tax contributions.
“In the formal sector, 3 million people pay KES 500 billion in income taxes. Meanwhile, 16 million people in the informal sector contribute only KES 12 billion,” Kuria noted.
The government plans to leverage Kenya’s widespread adoption of digital payments to modernise its tax system. Kuria described the country’s digital infrastructure as “better than the oil of Nigeria” or “the gold mines of Zimbabwe.”
To ensure compliance, the government intends to integrate Kenya’s tax systems with those of other countries to curb cross-border tax evasion. Kuria also addressed concerns over privacy and data protection, stating that these issues would not be allowed to hinder tax collection efforts.
The digitisation of Kenya’s tax system is part of a broader push to modernise the country’s economy. The government has already implemented digital tools in areas such as social protection and agriculture, with plans for a unified digital health platform in the future.
