Excise Duty in Kenya

Excise duty is a form of tax that is imposed on the local manufacture, importation or local supply of certain commodities and services. Excisable commodities include; bottled water, soft drinks, cigarettes, alcohol, fuels, and motor vehicles. Excisable services include; telephone and Internet data services, fees charged for money transfer services, and other fees charged by financial institutions.

The Tax Laws Amendment Act – TLAA, 2020 revised the Excise Duty Act, 2015 by amending the definition of ‘other fees’ earned by financial institutions to exclude other fees earned from non-licensed activities. This change reduced disputes with Kenya Revenue Authority(KRA) on what ‘other fees’ should be subject to excise duty.

The Excise Duty Act defines the word ‘license’ to mean the following:

• In the case of excisable services, ‘license’ refers to the certificate of registration.
• In the case of excisable goods, ‘license’ refers to the license issued under section 17 of the Excise Duty Act.
• In the case of carrying out any other activity in Kenya for which the Commissioner General for the KRA may impose a requirement for license, ‘license’ refers to the license required under section 15(1)(e).

The Finance Act, 2021 re-introduced excise duty on betting and gaming at the rate of 7.5% of the amount wagered or staked, while the Finance Act, 2022 exempted horse racing.

The Excise Duty Act contains a requirement for annual inflationary adjustment on excise duty rates to be tabled before Parliament for approval before the same can be affected by the Commissioner. According to The Finance Act, 2022 “the Commissioner may, by notice in the Gazette and with the approval of the Cabinet Secretary, exempt specified products from inflation adjustment after considering the circumstances prevailing in the economy in that year in respect of such products”.

Please find out more about the rates applied on different goods and services on this link: Click here to read