🔥 Trending Kenya's Excise Duty: What You Need to Know About Recent Changes

Kenya has recently implemented significant changes to its excise duty regime, primarily through the Finance Act 2026, which came into effect on July 1, 2026 ³. These changes aim to broaden the tax base, streamline processes, and adjust revenue collection in various sectors ⁷.

Overview of Key Changes

The Finance Act 2026 introduces a wide array of tax adjustments affecting income tax, withholding tax (WHT), Value Added Tax (VAT), and excise duty ³. The Kenya Revenue Authority (KRA) has been actively issuing directives to manufacturers and importers regarding these new rates ⁴.

Notable Excise Duty Adjustments Effective July 1, 2026

Several product categories have seen revisions in their excise duty rates:

Tobacco and Related Products

• Cigars: The excise duty on cigars has significantly increased to KSh 18,000 per kilogram ¹.

Beverages

• Fruit Juice: The excise duty structure for fruit juice has been revised ¹. While specific new rates are not detailed in the provided sources, the restructuring suggests a change in how these products are taxed.
• Bottled Water: A significant change is the removal of excise duty on bottled water. The Kenya Revenue Authority (KRA) confirmed that bottled water manufactured or imported on or after July 1, 2026, will no longer be subject to excise duty ⁴⁵. This change was communicated in a notice dated July 6, 2026, to manufacturers and importers ⁴.

Other Goods and Services

• Coal: For the first time, coal is being subjected to excise tax ¹. This marks a new area for revenue collection within the excise framework.
• Packaging Materials and Plastics: The Finance Act 2025 (which took effect on July 1, 2025, preceding the 2026 Act) introduced new and revised excise duties on packaging materials and plastics ⁶. While the 2026 Act continues this trend, the specific adjustments for 2026 are not detailed in the provided sources.
• Digital Transactions: Digital transactions are also among the areas affected by new excise duties, as per the Finance Act 2025 ⁶.

Finance Act 2025 vs. Finance Act 2026

It's important to distinguish between the Finance Act 2025 and the Finance Act 2026, as both have introduced tax changes in recent periods:

• Finance Act 2025: Took effect on July 1, 2025, and introduced new and revised excise duties on a range of imported goods and services, including packaging materials, plastics, digital transactions, and alcoholic beverages ²⁶.
• Finance Act 2026: Signed into law on June 23, 2026, with changes effective from July 1, 2026 ³. This act encompasses broader changes across various tax categories, including the specific excise duty adjustments mentioned above, such as those for cigars, fruit juice, coal, and bottled water ¹⁴.

Regulatory Framework

The Excise Duty (Remission of Excise Duty) Regulations, 2026, Legal Notice 61 of 2026, provides the legal framework for the remission of excise duty, further detailing how these new regulations will be applied ⁸.

These changes reflect Kenya's ongoing efforts to adjust its fiscal policies to meet economic objectives and revenue targets. Businesses and consumers alike are advised to stay informed about these updates to ensure compliance and understand the potential impacts on pricing and operations.