Relief for M-Pesa and Bank Users as Treasury Maintains Mobile Money Tax in Budget 2024/25

In a move that brings relief to millions of M-Pesa and bank users, Kenya's Treasury has decided to maintain the current excise duty on mobile money transfers. Treasury Cabinet Secretary Njuguna Ndung'u presented the national budget for the financial year 2024/25, highlighting key financial proposals aimed at broadening the tax base and increasing revenue collections.

The Finance Bill 2024 had initially proposed raising the excise duty on mobile money transfers from 15% to 20%. This proposed hike sparked significant concern among market players and critics who argued that such an increase would reverse much of the progress made in digital money transfers and financial inclusion.

Critics warned that raising the excise duty would likely push more Kenyans away from using mobile money services, reverting to cash transfers instead. This shift would undermine the electronic payment ecosystem that has become crucial for financial transactions across the country.

"Currently, excise duty is 15%. I propose to retain the excise rate of 15% on money transfer services charged by cell phone service providers to benefit the electronic payment ecosystem,"

Treasury CS Ndung'u announced during the budget presentation to Parliament. This decision is expected to stabilize the usage of mobile money services, ensuring continued growth and accessibility for all Kenyans.

By maintaining the current excise duty, the government aims to support the electronic payment ecosystem and avoid disrupting the advancements made in financial inclusion. This decision underscores the Treasury's commitment to fostering a favorable environment for digital financial services while still seeking ways to broaden the tax base and enhance revenue collection.

As Kenya continues to embrace digital financial solutions, the retention of the 15% excise duty on mobile money transfers is a welcome move for users and service providers alike. It ensures that the momentum gained in digital transactions remains strong, contributing to the country's overall economic growth and financial stability.