IND 1
Excise duty
1Scope and legal basis
The Excise Duty Act 2015 (in force from 1 December 2015) charges excise duty under section 5 on excisable goods manufactured in Kenya by a licensed manufacturer, on excisable goods imported into Kenya, and on excisable services supplied in Kenya by a licensed person, at the rates in the First Schedule. Excise is a selective tax on particular goods and services, historically alcohol, tobacco, fuel and vehicles, now extended to sugar, confectionery, juices, plastics, cosmetics, imported building materials, and to services: airtime and data, money transfer, bank and financial fees, betting and gaming, digital lending fees, virtual asset fees, and advertising on alcohol, betting and gaming. It is levied once, at manufacture or import (or on the supply of the service), and is part of the value on which VAT is charged. The Finance Act 2026 rewrote several rates (uniform KES 22.50 per centilitre of pure alcohol for beer, juices to KES 20 a litre, imported sugar to KES 40 a kilogram, tobacco up, bottled water removed) and added new excisable goods (timber and boards at 30%, plastic sheeting, sanitary ware and tiles by weight, smartphones on activation at 25%), and changed the betting base from wallet deposits to amounts deposited for gambling. The Excise Duty Regulations 2019 and the Excise Duty (Excisable Goods Management System) Regulations govern licensing, stamps and returns.
2Key definitions
3Charge, computation and rates
Rates on goods in force (selected)
| Good | Rate after the Finance Act 2026 |
|---|---|
| Beer, cider and other fermented beverages (all brewers) | KES 22.50 per centilitre of pure alcohol (a uniform rate; the small-brewer concession was removed) |
| Wine and fortified wine | KES 22.50 per centilitre of pure alcohol |
| Spirits and spirituous beverages | KES 10 per centilitre of pure alcohol (the 2024 Act's alcohol-content basis); extra neutral alcohol for licensed manufacturers KES 80 per litre |
| Cigarettes (filtered and plain) | KES 4,100 per mille |
| Cigars, cheroots, cigarillos | KES 18,000 per kilogram |
| Manufactured tobacco and substitutes; oral smokeless tobacco (snus) | KES 12,550 per kilogram; snus KES 2,000 per kilogram |
| Nicotine products and pouches; e-cigarette liquid | KES 2,000 per kilogram; KES 100 per millilitre |
| Fruit and vegetable juices | Sweetened KES 20 per litre; unsweetened KES 14.14 per litre |
| Non-alcoholic beverages (sodas, energy drinks) | KES 6.41 per litre; bottled water removed from excise in 2026 |
| Sugar confectionery and chocolate | KES 85.82 per kilogram (tariff 17.04); chocolate at the Schedule rate |
| Imported sugar | KES 40 per kilogram (from KES 7.50) |
| Motor vehicles | 20% for engines up to 1500cc; 25% for 1500cc to 3000cc; 35% above 3000cc; 10% for fully electric vehicles; 50% ad valorem for antique or classic vehicles over 30 years old valued above KES 10 million; motorcycles KES per unit rate |
| Petroleum products | Specific rates per litre set in the Schedule (petrol, diesel and kerosene), adjusted for inflation by the Commissioner under the Act |
| Cosmetics and beauty products | 15% of excisable value |
| Plastics: imported polymers, self-adhesive plates, unprinted plastic sheets | 25% (non-EAC); unprinted sheets 10%; unprinted banner and flex sheeting KES 200 per kilogram or 35%, whichever is higher |
| Imported ceramic tiles and sanitary ware; float glass; LPG cylinders | 5% or KES 50 per kilogram (whichever is higher) for tiles and sanitary ware; float glass 35% or KES 200 per kilogram; LPG cylinders 35% |
| Imported timber, MDF, particle board, plywood | 30% of excisable value |
| Shower heads and heating elements | 35% of excisable value |
| Coal | 5% or KES 27,000 per tonne |
| Smartphones and related devices | 25%, charged on activation of the device on a network (Finance Act 2026), not at import |
Rates on services in force
| Service | Rate | Base |
|---|---|---|
| Telephone and internet data services (airtime, data) | 15% | The charge for the service excluding VAT |
| Money transfer services by banks, money transfer agencies and other financial service providers | 15% | Fees charged for the transfer |
| Money transfer services by mobile network operators and payment service providers | 15% | Fees charged |
| Other fees charged by financial institutions (excluding interest, insurance premiums and profit share) | 15% | Fees |
| Fees charged by digital credit providers (licensed by the Central Bank) | 20% | Fees excluding interest |
| Betting | 5% | Amounts deposited for betting purposes, regardless of wallet arrangements (Finance Act 2026); horse racing no longer excluded |
| Gaming | 5% | Amounts deposited for gaming purposes |
| Lottery (excluding charitable lotteries) and prize competitions | 5% on the amount paid or charged to participate; lottery tickets at the Schedule rate | Amount paid |
| Advertising on television, print, billboards, radio and internet or social media for alcohol, betting, gaming, lotteries and prize competitions | 15% | The advertising fee |
| Fees of virtual asset service providers (exchanges, trading platforms, brokers) | 10% | Fees charged for the transfer or exchange of digital assets |
| Excisable services supplied by non-residents over the internet, an electronic network or a digital marketplace to Kenyan consumers | The rate for the service | The fee; the non-resident registers and accounts for the duty |
Import of 1,000 litres of spirits at 40% alcohol, and a local brewer's month
Imported spirits: customs value KES 2,000,000; import duty at 35% = 700,000. Excise: 1,000 litres × 40% = 400 litres of pure alcohol = 40,000 centilitres × KES 10 = KES 400,000. VAT: 16% × (2,000,000 + 700,000 + 400,000) = 496,000. IDF 2.5% and RDL 2% of customs value: 50,000 and 40,000. Total import taxes: KES 1,686,000. Excise stamps must be affixed before release.
Local brewer: 500,000 litres of beer at 5% alcohol removed from the factory in September 2026: 500,000 × 5% = 25,000 litres of pure alcohol = 2,500,000 centilitres × KES 22.50 = KES 56,250,000 of excise, returned and paid by the 5th of October under the Tax Laws (Amendment) Act 2024 timing (previously within 24 hours of removal), with VAT then charged on the excise-inclusive ex-factory price.
Mobile money: a KES 100 transfer fee attracts excise of KES 15 (15%) and VAT at 16% on (100 + 15) = 18.40, so the customer pays KES 133.40; the operator files a monthly excise return by the 20th.
Operational rules
- Time of charge: locally manufactured goods when removed from the factory or the bonded excise warehouse (or used in the factory); imported goods at the time of customs entry; services at the time of supply (when the fee is charged).
- Inflation adjustment: the Commissioner may adjust the specific rates annually for inflation by notice (the Finance Act 2023 made the adjustment discretionary with a 10% cap, and it has applied to fuel, alcohol and tobacco).
- Excise stamps: purchased from the KRA at a price per stamp and affixed before removal or entry; the stamp price is not the duty. Goods without stamps, with counterfeit stamps or with stamps for another product are seized.
- Excise and VAT stack: excise is included in the taxable value for VAT, and both are included in the cost of goods for income tax where not recoverable; excise paid on inputs used to make other excisable goods is offset against the duty on the output.
- Exports are exempt from excise (or the duty is refunded), as are goods for diplomats, the disciplined forces' welfare services, the National Intelligence Service (2026) and aid-funded projects; excise on raw materials for exempt uses is remitted.
- The Finance Act 2025 subjected non-resident suppliers of excisable digital services (streaming and gaming platforms, digital lenders operating from abroad) to excise; the Finance Act 2026 shifted smartphone excise to the point of activation, collected through the operators.
4Compliance: returns, payment and penalties
- A manufacturer, importer of stamped goods or supplier of excisable services applies for an excise licence on iTax (annual fee by class, renewable), registers premises and plant, keeps stock and production records in the prescribed form, and, for stamped goods, integrates with the Excisable Goods Management System.
- File the monthly excise return and pay by the 20th of the following month; alcoholic beverage manufacturers pay the duty on removals by the 5th of the following month (2024); importers pay at customs entry before release. Non-resident digital suppliers register and file monthly.
- Penalties: late filing the higher of 5% of the duty and KES 10,000; late payment 5% plus 1% a month interest; manufacturing without a licence, removing goods without paying duty, or dealing in unstamped goods are offences with a penalty of double the duty and forfeiture of the goods, plant and vehicles, and imprisonment on conviction.
- The Commissioner may seal premises, seize goods and require security (a bond) from a licensee; licence conditions include allowing officers access and installing meters and monitoring devices.
5Examinable focus
What KASNEB tests
Excise questions are computational and current: an import of alcohol, cigarettes, a vehicle or sugar with a customs value, asking for import duty, excise (specific or ad valorem, on the right base), VAT on the stacked value, IDF and RDL, and the total; or a mobile money or airtime example showing excise then VAT on the excise-inclusive fee. Learn the headline rates above (KES 22.50 per centilitre for beer, KES 4,100 per mille cigarettes, 15% airtime and money transfer, 5% betting on deposits, 20% digital lender fees, 25% smartphones on activation, vehicle bands 20/25/35 and 10% for EVs). Theory parts ask for the purposes of excise (revenue, discouraging consumption, protecting local industry), the licensing and stamp system, remissions and refunds, and the 2024 to 2026 changes in the alcohol, betting and digital service rules.