Excise Duty
Tax on specific goods including alcohol, tobacco, petroleum products, vehicles, and services. Comprehensive guide to rates, compliance, and calculation methods for excise duty in Kenya.
What is Excise Duty?
Understanding specific goods taxation in Kenya
Excise Duty is a tax imposed on the manufacture, production, or importation of specific goods in Kenya. Unlike VAT which applies broadly, excise duty targets particular products deemed to have social, health, or environmental implications. It's typically collected at the point of manufacture or importation, making it an indirect tax ultimately borne by consumers.
Specific Goods Only
Excise duty applies only to goods specifically listed in the Excise Duty Act, including alcohol, tobacco, petroleum products, vehicles, and certain services.
Manufacturing & Import
Duty is payable on domestic production and importation. Local manufacturers must pay before goods leave the factory, while importers pay at the port of entry.
Different Rate Structures
Rates can be specific (per unit), ad valorem (percentage of value), or mixed. Some products have tiered rates based on characteristics like alcohol content.
Revenue & Control
Serves dual purposes: generating government revenue and controlling consumption of goods that may have negative social, health, or environmental impacts.
Excise Duty Categories
Major categories of excisable goods and services
Alcoholic Beverages
Beer, wine, spirits and other alcoholic drinks
- Beer (alcohol content ≤ 6%)KSh 134.24/litre
- Wine (alcohol content ≤ 22%)KSh 243.02/litre
- Spirits (alcohol content > 22%)KSh 338.71/litre
- Ready-to-drink beveragesKSh 243.02/litre
- Traditional alcoholKSh 134.24/litre
Tobacco Products
Cigarettes, cigars, tobacco and related products
- CigarettesKSh 3,200/1000 sticks
- Cigars and cigarillosKSh 6,000/kg
- Manufactured tobaccoKSh 3,200/kg
- Other tobacco productsKSh 3,200/kg
- Electronic cigarettesKSh 2,500/unit
Petroleum Products
Fuel, oils and petroleum-based products
- Motor spirit (petrol)KSh 21.95/litre
- Gas oil (diesel)KSh 11.37/litre
- Kerosene (illuminating)KSh 7.81/litre
- Heavy fuel oilsKSh 6.50/litre
- Liquefied petroleum gasKSh 7.31/kg
Motor Vehicles
Cars, motorcycles and other motor vehicles
- Motor cars (≤ 1500cc)KSh 200,000/unit
- Motor cars (1501-3000cc)KSh 300,000/unit
- Motor cars (> 3000cc)KSh 400,000/unit
- MotorcyclesKSh 12,000/unit
- Commercial vehiclesVariable rates
Services & Others
Telecommunications, financial services and others
- Mobile phone services15% of charges
- Money transfer services12% of charges
- Betting and gaming7.5% of stakes
- Air time on aircraftKSh 100/hour
- Sugar confectioneryKSh 5/kg
Important Rate Information
- Rate Changes: Excise duty rates are reviewed annually during budget presentations
- Inflation Adjustment: Specific rates are adjusted for inflation annually
- Mixed Rates: Some products have both specific and ad valorem components
- Minimum Rates: Some categories have minimum duty amounts regardless of value
- Exemptions: Certain products may qualify for exemptions or reduced rates
Excise Duty Calculator
Calculate excise duty for various products. Select your product category and enter the quantity to determine the duty payable.
Excise Duty Compliance
Registration, filing and payment requirements
For Manufacturers
License Application
Apply for manufacturing license from KRA before commencing production of excisable goods. Submit detailed business plan and facility information.
Factory Registration
Register manufacturing premises with KRA. Install required security systems and allow KRA officers to verify compliance with regulations.
Production Records
Maintain detailed production records including raw materials, production volumes, wastage, and finished goods. Records must be available for KRA inspection.
Duty Payment
Pay excise duty before goods leave the factory. Obtain duty stamps, labels, or other security features as required for specific products.
Monthly Returns
File monthly excise duty returns by the 20th of the following month via iTax portal. Include production and sales data with supporting documentation.
For Importers
Import Declaration
Declare excisable goods accurately on import documentation. Provide detailed product descriptions, quantities, and values for duty calculation.
Duty Assessment
KRA assesses excise duty based on product classification and applicable rates. Challenge assessments through proper appeal procedures if necessary.
Payment at Port
Pay all assessed duties before goods clearance. Use approved KRA payment methods and obtain proper receipts and clearance documents.
Documentation
Maintain import documents, duty payment receipts, and clearance certificates. These are required for audit purposes and business operations.
Key Compliance Requirements
Current Excise Duty Rates 2024
Complete rate schedule for all excisable goods
Alcoholic Beverages
| Product | Rate | Unit | Notes |
|---|---|---|---|
| Beer (alcohol content ≤ 6%) | KSh 134.24 | Per litre | Most common beer category |
| Wine (alcohol content ≤ 22%) | KSh 243.02 | Per litre | Includes fortified wines |
| Spirits (alcohol content >22%) | KSh 338.71 | Per litre | Whiskey, vodka, gin, etc. |
| Ready-to-drink beverages | KSh 243.02 | Per litre | Pre-mixed alcoholic drinks |
| Traditional/local alcoholic drinks | KSh 134.24 | Per litre | Traditional brews |
Tobacco Products
| Product | Rate | Unit | Notes |
|---|---|---|---|
| Cigarettes | KSh 3,200 | Per 1000 sticks | Standard cigarettes |
| Cigars and cigarillos | KSh 6,000 | Per kg | Premium tobacco products |
| Manufactured tobacco | KSh 3,200 | Per kg | Pipe tobacco, chewing tobacco |
| Electronic cigarettes | KSh 2,500 | Per unit | E-cigarettes and vaping devices |
Petroleum Products
| Product | Rate | Unit | Notes |
|---|---|---|---|
| Motor spirit (Petrol) | KSh 21.95 | Per litre | Regular and premium petrol |
| Gas oil (Diesel) | KSh 11.37 | Per litre | Automotive diesel |
| Kerosene (Illuminating) | KSh 7.81 | Per litre | Household kerosene |
| Heavy fuel oils | KSh 6.50 | Per litre | Industrial fuel |
| Liquefied petroleum gas | KSh 7.31 | Per kg | Cooking gas |
Common Excise Duty Issues
Avoid these costly mistakes and penalties
Incorrect Product Classification
Misclassifying products can lead to wrong duty rates, resulting in underpayment or overpayment of excise duty and potential penalties.
Solution: Consult KRA's product classification guidelines and seek clarification for ambiguous products.
Unlicensed Manufacturing
Manufacturing excisable goods without proper licenses can result in facility closure, product seizure, and criminal prosecution.
Solution: Apply for manufacturing license before starting production and ensure all permits are current.
Inadequate Security Measures
Failure to implement required security measures for high-risk products can lead to duty stamps being compromised or counterfeited.
Solution: Install KRA-approved security systems and maintain proper handling of duty stamps and labels.
Poor Record Keeping
Inadequate production and sales records make audits difficult and may result in estimated assessments and penalties.
Solution: Implement robust record-keeping systems and maintain daily production and sales logs.
Frequently Asked Questions
Expert answers to common excise duty questions
What is the difference between specific and ad valorem excise duty?
Specific excise duty is a fixed amount per unit (e.g., KSh 134.24 per litre of beer), while ad valorem excise duty is a percentage of the product's value (e.g., 15% of mobile phone service charges). Some products may have mixed rates combining both specific and ad valorem components.
When exactly must excise duty be paid for manufactured goods?
Excise duty on manufactured goods must be paid before the goods leave the factory premises. This means duty must be paid upon completion of manufacturing and before any distribution or sale. KRA may require security measures to ensure compliance with this requirement.
Can I claim a refund if I paid excess excise duty?
Yes, you can claim a refund for excess excise duty paid within four years of payment. Submit a refund application through iTax with supporting documents including payment receipts, duty calculations, and evidence of overpayment. KRA will verify the claim before processing the refund.
Are there any exemptions or reduced rates for excise duty?
Yes, certain products and circumstances may qualify for exemptions or reduced rates. Examples include goods for export, products used in further manufacturing (in some cases), and goods for diplomatic missions. Specific exemptions are outlined in the Excise Duty Act and require proper application and approval.
How are excise duty rates adjusted for inflation?
Specific excise duty rates (fixed amounts per unit) are typically adjusted annually for inflation as announced during budget presentations. The adjustment is usually based on the consumer price index to maintain the real value of the tax. Ad valorem rates (percentages) generally remain constant unless policy changes are made.
What happens if I manufacture excisable goods without a license?
Manufacturing excisable goods without a proper license is a criminal offense that can result in facility closure, product seizure, prosecution, and substantial penalties. Additionally, all manufactured goods may be subject to duty assessment, and the manufacturer may be required to pay all applicable duties plus penalties and interest.