- New excise duty regulations broaden tax incentives for locally sourced agricultural products while introducing stricter compliance requirements for manufacturers.
- Beer
- Wine
- Distilled spirits
- Compounded spirits
- Sorghum
- Millet
- Cassava
- Other agricultural produce grown in Kenya
- Full tax compliance, including registration and compliance with eTIMS
- A valid excise licence for the relevant product category
- Installation of the Excisable Goods Management System (EGMS)
- A documented list of contracted Kenyan farmers supplying eligible raw materials
- A verification framework demonstrating that locally sourced crops are used in production
- The full amount of excise duty previously remitted becomes payable;
- Interest and penalties applicable to outstanding tax arrears may also be imposed.
- Maximum retail price: KES 150 per litre (increased from KES 100 under the previous regulations)
- Packaging must comply with approved container specifications.
- Maximum retail price: KES 750 per litre
- Products must be labelled “WINE UNDER EXCISE DUTY REMISSION.”
- Maximum retail price: KES 350 per litre
- Packaging requirements include large-capacity production containers.
- Maximum retail price: KES 500 per litre
- Products must carry the label “SPIRITS UNDER EXCISE DUTY REMISSION.”
This article is based on insights provided by Alex Mathini, Andrew Oduor and Samuel Githanda (Partners), and Kelvin Mbithi (Associate), Bowmans Kenya, on Kenya’s Excise Duty (Remission of Excise Duty) Regulations, 2026.
Kenya Expands 80% Excise Duty. Kenya has introduced a new framework for excise duty remission that significantly expands tax incentives for manufacturers using locally grown agricultural produce in the production of alcoholic beverages.
The Excise Duty (Remission of Excise Duty) Regulations, 2026, which came into effect on 1 April 2026, replace the previous 2017 regulations and broaden eligibility for the country’s 80% excise duty remission beyond beer to now include wine and spirits.
The reforms are expected to encourage greater investment in Kenya’s agro-processing sector, stimulate demand for locally produced crops, and strengthen value addition within the country’s agricultural economy.
New Regulations Replace the 2017 Framework
The 2026 Regulations, issued under Kenya’s Excise Duty Act, formally repeal the Excise Duty (Remission of Excise Duty) Regulations, 2017.
While maintaining the existing 80% remission rate, the new rules introduce several notable changes designed to align tax incentives with Kenya’s agricultural and industrial development objectives.
The Cabinet Secretary for the National Treasury also retains the authority to impose additional conditions on manufacturers that previously benefited from remission under the former regulations. Businesses receiving such notifications will have six months to comply with the new requirements.
Wine and Spirits Now Qualify for Excise Duty Relief
One of the most significant changes introduced by the new regulations is the expansion of the remission scheme beyond beer production.
Manufacturers producing the following beverages may now qualify for an 80% excise duty remission:
To qualify, the products must be manufactured using eligible agricultural raw materials such as:
However, sugarcane and barley remain excluded from the incentive.
In addition, at least 75% of the qualifying raw materials used in production must be sourced from within Kenya.
Government Removes Previous 90% Relief for Large Beer Manufacturers
While the new framework broadens product eligibility, it also removes a previous incentive that granted a 90% excise duty remission to certain large-scale beer manufacturers.
Under the repealed regulations, breweries that invested at least KES 5 billion and entered into agreements with the Government of Kenya could benefit from the higher remission for up to five years.
That preferential incentive has now been discontinued, leaving a uniform 80% remission for qualifying manufacturers.
SEE ALSO: Kenya Launches Fresh Tax Amnesty as Businesses Get Six-Month Window to Clear Historic Tax Debts
Compliance Requirements Become More Structured
Manufacturers seeking the remission must satisfy several regulatory conditions before approval.
Among the key requirements are:
These measures are intended to ensure that the tax incentive directly benefits Kenya’s agricultural sector rather than imported supply chains.
Quarterly Returns Replace Monthly Reporting
The regulations also modify reporting obligations for manufacturers benefiting from the remission.
Instead of filing monthly returns under the previous framework, qualifying manufacturers will now submit compliance returns to the Kenya Revenue Authority (KRA) every three months.
The revised filing schedule is expected to reduce administrative burdens while maintaining oversight of manufacturers participating in the remission programme.
Failure to Comply Could Trigger Full Tax Recovery
The regulations give the Cabinet Secretary powers to revoke the remission where manufacturers fail to comply with either the Excise Duty Act or the 2026 Regulations.
Where remission is withdrawn:
Manufacturers therefore remain subject to ongoing compliance monitoring even after receiving approval.
Product-Specific Conditions
Beyond the general compliance requirements, the regulations prescribe specific pricing, packaging and labelling requirements depending on the product category.
Among the notable provisions:
Beer
Wine
Distilled Spirits
Compounded Spirits
Additional technical requirements, including flowmeter installations for certain manufacturers, also apply.
Why the Reforms Matter
The expanded remission framework reflects Kenya’s broader policy objective of encouraging manufacturers to source raw materials domestically while supporting farmers through increased demand for locally grown crops.
By extending the incentive to wine and spirits, the government is widening access to tax relief across the alcoholic beverage industry and strengthening linkages between agriculture and manufacturing.
At the same time, tighter compliance conditions indicate that authorities are seeking greater accountability to ensure tax incentives achieve their intended economic objectives.
