The document is an updated version of the Kenya Excise Duty Act No. 23 of 2015, incorporating significant changes from the Finance Act 2025. The Act continues to provide the framework for the charge, assessment, and collection of excise duty, with new focus areas on the digital economy, small-scale manufacturing, and specific imported goods.

Liability for Excise Duty:

• General Scope: Excise duty applies to excisable goods manufactured in Kenya, excisable services supplied in Kenya, and excisable goods imported into Kenya.

• Digital Services: The scope is expanded to include services supplied via the internet, electronic networks, or digital marketplaces. This applies even if the service is supplied by a non-resident person, provided the service is consumed in Kenya.

• Virtual Assets: A new 10% excise duty is introduced on fees, charges, or commissions charged by virtual asset providers for virtual asset transactions (e.g., cryptocurrency transfers).

Licensing and Compliance:

• New Licensing Requirements: All businesses handling ethanol or methanol—including importers, distributors, and processors—are now required to obtain an excise license to curb illicit alcohol production.

• Microdistiller Relief: A new category for "microdistillers" (producing up to 100,000 liters annually) has been introduced. They are exempt from certain costly requirements like continuous piping and automated mass flow meters, though they must still use excise stamps.

• Faster Processing: The Commissioner is now mandated to respond to excise license applications within 14 days once all required documents are submitted.

• Certificate of Origin: A valid Certificate of Origin is now mandatory for the clearance of all imported goods to prevent tax evasion through misdeclaration.

Non-Liability and Exemptions:

• Expanded Exemptions: Goods and services supplied for the Defence Forces Welfare Services are now fully exempt from excise duty.

• Agricultural Relief: Excise duty has been removed (exempted) for imported eggs, onions, and potatoes to improve food affordability.

• Exported Services: Services are considered exported and not subject to duty if supplied from Kenya for use or consumption outside the country.

Payment and Rates:

• Betting and Gaming: The excise duty rate on betting, gaming, and lotteries has been significantly reduced from 15% to 5%, but the tax is now charged on the amount deposited into a customer's wallet rather than the amount wagered.

• Specific Rate Increases: Duty has increased on several imported items to protect local industry:

  • Plastics and Films: 25% or KES 200/kg (whichever is higher).

  • Glass Bottles: 35% or KES 40/kg (excluding pharmaceutical packaging).

  • Imported Paper: Rates for various paper products (e.g., cartons, labels) increased to 25% or KES 200/kg.

• Payment Timelines: For alcoholic beverages, manufacturers must remit excise duty by the fifth day of the following month, providing more flexibility compared to previous 24-hour requirements.

Administration:

• Tax Procedures Act: The Tax Procedures Act, 2015 remains the primary administrative law for this Act.

• Digital Lenders: The definition of "digital lender" has been refined to explicitly include anyone providing credit through electronic means, subjecting their fees (excluding interest) to excise duty.