1. Reduced Excise Duty on Ethanol for Licensed Beverage Manufacturers
The Finance Act, 2026 reduced the Excise Duty on extra neutral alcohol (ENA) with an alcoholic strength exceeding 90% from KES 500 to KES 80 per litre.
The reduced rate remains restricted to licensed manufacturers of spirituous beverages. The proposal to extend this rate to all purchasers was not retained.
Implications for Licensed Manufacturers
- Licensed manufacturers benefit from lower production costs.
- Reduced input costs may improve profit margins and support competitive pricing.
- The restriction maintains control over who benefits from the reduced rate.
2. Increased Excise Duty on Tobacco Products
The Finance Act, 2026 retained increases in Excise Duty on specified tobacco products and introduced Excise Duty on oral smokeless tobacco products, including Swedish-style snus.
Revised Excise Duty Rates
- Cigars, cheroots and cigarillos containing tobacco or tobacco substitutes: KES 18,000 per kilogram, up from KES 16,260.29.
- Other manufactured tobacco and tobacco substitutes, including homogenised and reconstituted tobacco, extracts and essences: KES 12,550 per kilogram, up from KES 11,382.48.
- Oral smokeless tobacco products, including Swedish-style snus: KES 2,000 per kilogram.
Implications for Tobacco Businesses
- Manufacturers and importers face increased Excise Duty costs.
- Retail prices may rise as businesses pass on the additional costs.
- Businesses dealing in smokeless tobacco must account for the newly introduced Excise Duty category.
Key Takeaway
The Finance Act, 2026 provides targeted relief to licensed spirituous-beverage manufacturers through a lower ENA rate, while increasing Excise Duty on specified tobacco products and adding a category for oral smokeless tobacco.
Source: Finance Act, 2026, page 40.
TAX HOME KENYA LIMITED (THK)
Simplifying Your Tax Journey.
📱 Call/WhatsApp: +254 725 416 982
📧 taxhomekenya24@outlook.com
🌐 taxhomekenya.github.io