A tax expert has warned that Finance Bill 2026 proposals to tax digital payment platforms could undermine Kenya’s financial inclusion gains and increase the cost of using M-Pesa.

📻 Breaking It Down

NAIROBI, Kenya, May 21 — A tax expert has warned that proposals in the Finance Bill 2026 to impose value-added tax on digital payment platforms could reverse years of progress in financial inclusion and digital commerce by discouraging the use of mobile money services such as M-Pesa.

Kiema Onesmus, KPMG East Africa Associate Director for Tax and Regulatory Services, said the proposed taxation of transaction charges risks pushing Kenyans back toward cash-based transactions at a time when the country has become a global model for mobile money adoption.

Speaking during an interview on the proposed Finance Bill 2026, Onesmus argued that the government’s revenue-raising agenda was increasingly focused on aggressive taxation measures rather than policies designed to stimulate economic growth and ease the cost of living.

📌 What You Need to Know

“The proposals, if they sail through as they are, will set us back way more — almost like a thousand steps,” Onesmus said while discussing the planned 16 percent VAT on fees earned by digital payment platforms.

He noted that Kenya’s mobile money ecosystem has transformed daily commerce, allowing users to pay matatu fares, settle bills, transact with small businesses and send money without relying on cash.

“Nowadays it’s very easy for you to go to a mama mboga and pay using M-Pesa. It’s very easy for you to board a matatu and pay your fare using M-Pesa,” he said.

According to Treasury proposals, the VAT would apply to commissions and service fees earned by operators of Kenya’s digital payment platforms rather than directly targeting consumer transfers.

However, Onesmus cautioned that operators were likely to pass the additional costs on to customers.

He warned that higher transaction costs could discourage the use of digital platforms and undermine Kenya’s internationally recognised success in expanding financial inclusion through mobile money technology.

📰 Source: Capital FM Kenya