Kenyans might soon be able to buy locally assembled smartphones at much cheaper prices if a new proposal by East Africa Devices Assembly Kenya Limited (EADAK) is approved.
EADAK is asking the government to remove Value Added Tax (VAT) on the raw materials and parts imported for assembling mobile phones locally. They say the current tax rules make it more expensive to produce phones in Kenya, which could lead to higher prices for consumers.
During public discussions about the Finance Bill 2025 on Tuesday, experts from EADAK explained that the Bill currently exempts VAT only on the finished phones assembled in Kenya but still requires VAT payment on the imported inputs like parts and materials used in making these phones.
This situation means phone manufacturers have to pay VAT on these inputs but cannot claim it back later. Because they cannot recover these taxes, the extra costs pile up, making production more expensive. This extra cost will likely be passed on to buyers in the form of higher prices.
EADAK’s proposal suggests that not only should the locally assembled phones be exempt from VAT, but the imported materials and parts used by approved local manufacturers should also be VAT-free. This way, the tax system would not add hidden costs to the production process.
At the moment, EADAK produces smartphones locally that sell for around Ksh7,499. But if the Finance Bill 2025 is passed without changes, these prices could go up, making it harder for many Kenyans to afford smartphones.
The company emphasized that if VAT is only removed on the final phones but not on the inputs, consumers will end up paying more because the tax on inputs is embedded in the price. However, if both the raw materials and finished phones are VAT-exempt, the final price will stay low, similar to a zero-rated tax sale.
This proposal comes as President William Ruto pushes for more local smartphone manufacturing. He believes affordable phones are essential for Kenya’s digital future, enabling more people to access the internet, mobile money, and online shopping.
President Ruto has set an ambitious target to produce smartphones that cost less than Ksh5,000, making Kenya home to the cheapest smartphones in Africa. But the current Finance Bill 2025 threatens to slow down this plan by making local phone assembly more expensive.
In summary, EADAK’s call for VAT exemption on both imported phone parts and locally assembled phones aims to reduce costs for manufacturers, lower prices for consumers, and support Kenya’s vision for digital growth. Without these tax changes, affordable smartphones may remain out of reach for many Kenyans.
Join Gen Z New WhatsApp Channel To Stay Updated On time https://whatsapp.com/channel/0029VaWT5gSGufImU8R0DO30
