The government of President William Ruto is planning to slap heavy taxes on M-Pesa money transfers. This follows a taxation proposal that is contained in the Finance Bill 2026. In the proposal, President Ruto’s government through the National Treasury is planning to slap a 16 percent VAT charge on money transfers made through M-Pesa, Airtel Money, Pesapal and another 39 payment platforms used to transfer cash across the country.
In pushing for this taxation, the government has claimed that the VAT charge of 16 percent will be paid by payment service providers such as Safaricom and Airtel, and not by the people who actually use these mobile transfer services.
“The person who supplies ICT to enable payments, including paybills or tills, is the one subject to VAT. Persons making payments would be out of the scope for VAT as they are not supplying any services,” the National Treasury’s Director General of Budget Albert Mwenda told a local newspaper.
However, this line of argument has been criticized as deceptive, with payment service providers expected to pass the burden of paying the VAT onto service users through increased money transfer fees.
“This is the same reasoning that we have seen being deployed by proponents of trade tariffs globally; the claim that it is not the people who pay tariffs but countries and big businesses, which is a huge misconception,” said financial analyst Jefferson Ndunge.
“In this case, just as has happened with tariffs in other jurisdictions, ordinary Kenyans who use mobile money will end up paying higher fees to cover for the new VAT charge.”
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Previously, Safaricom, which runs the largest money transfer platform M-Pesa, has opposed attempts to hike taxes on mobile money transfers. The telecommunications firm has argued that such an increase would hurt low-income earners and their families who rely on mobile money services such as M-Pesa.
But according to the National Treasury, M-Pesa was licensed by the Central Bank of Kenya (CBK) in the late 2000s as a pay service provider (PSP) and as a result, its charges on money transfers are subject to VAT of 16 percent as proposed by the Finance Bill 2026.
Currently, Safaricom charges Sh7 for M-Pesa transfers of between Sh101 and Sh500 and a maximum of Sh108 for transfers of Sh50,000 and above. Transfers that fall below Sh100 are not charged.
