The taxman is reviewing the excise tax regime, effectively extending tax relief in the alcoholic beverages industry in Kenya beyond the beer segment to target increasing number of spirits and wine makers.

Under the Kenya Revenue Authority's Excise Duty (Remission of Excise Duty) Regulations 2026, the National Treasury targets more players in agriculture and manufacturing value chain whose business are main suppliers of the country's estimated KES150 billion alcoholic beverages industry.

The new regulations, which came into force on 1st April 2026, seek to replace the rather narrower 2017 excise tax laws that were largely focused on the beer segment of the industry.

"Kenya’s excise duty remission framework has evolved from a beer focused regime under the 2017 regulations to a broader regime covering multiple product categories," a July 2026 tax update by audit giant PwC states in part.

"The 2026 regulations establish a structured remission framework covering additional product categories, defined eligibility criteria, product classifications, and the application of remission to spirits based on ABV thresholds. The framework also introduces enhanced compliance, monitoring and reporting requirements aimed at strengthening the administration of remission."

While the remission rate for eligible manufacturers remains at 80 percent, the opportunity to benefit has been significantly widened.

Previously, only beer manufacturers using at least 75 percent locally sourced agricultural inputs, excluding barley and sugarcane, could apply for remission from the taxman. 

Criteria for spirits makers

New regulations retain this requirement for beer but now extend it to wine, while also introducing specific criteria for spirits.

For spirits, remission is now granted based on the use of Extra Neutral Alcohol (ENA) exceeding 90 percent alcohol by volume (ABV). 

This remission is primarily applicable to licensed distillers, including those who compound their own product under prescribed conditions. The framework also introduces stringent new commercial conditions, including packaging minimums and price caps, to qualify for the tax benefit.

PwC analysis notes: "The framework has moved from a beer-specific regime to a broader regime covering multiple product categories".

Latest industry regulations are poised to push for enhanced traceability requirements in the alcoholic beverage business, including farmer registration and verification of local sourcing. This push will likely require businesses to engage deeply with multiple suppliers across the agricultural value chain.

Manufacturers will be forced to integrate with the KRA’s Excisable Goods Management System (EGMS), install flow meters and adhere to expanded reporting obligations on a quarterly basis.

Pricing caps

Remission labelling and strict adherence to pricing thresholds will also be required for players in the business. For instance, spirits sold under the remission scheme must be priced at a maximum of KES350 per litre, while the price cap for beer has been raised to KES150 per litre, up from KES100. Wine has been capped at KES750 per litre.

PwC alert advises that early action will be critical for companies to maximize the available opportunities and manage potential excise duty exposures arising from non-compliance.

"Businesses should assess how the new eligibility criteria align with their sourcing strategies, product portfolio, pricing models and operating structures," the report states. 

"Manufacturers should evaluate whether existing systems, processes and compliance frameworks are sufficient to support the enhanced monitoring and reporting requirements".

The regulations provide a six-month transition period for existing beer manufacturers to align with the new compliance requirements, offering a brief window for adjustment.

However, for new entrants in the spirits and wine segment, the framework is immediately applicable, requiring swift and comprehensive action to ensure eligibility.

[email protected]