The National Treasury has exempted manufacturers of qualifying wines and spirits to some taxes which were previously a preserve for beer brewers.
This follows the expansion of the range of alcoholic beverages eligible for excise duty remission.
The new Excise Duty (Remission of Excise Duty) Regulations, 2026, mark one of the biggest changes to Kenya’s excise tax regime in nearly a decade by replacing the beer-only remission introduced in 2017 with a broader system covering beer, spirits and wine.
The expanded framework is expected to lower production costs for qualifying manufacturers while encouraging greater use of locally sourced agricultural raw materials in the alcoholic beverages industry.
“The framework introduces additional compliance measures, including EGMS integration, flow meter installation, and expanded reporting obligations, which form part of the administration of remission,” Said PwC associate director indirect taxes Maurice Mwaniki
Previously, only beer manufactured using at least 75 per cent locally sourced agricultural inputs excluding barley, qualified for an 80 per cent remission of excise duty.
Under the new regulations, the same 80 per cent remission has been extended to eligible spirits and wine, provided manufacturers meet strict sourcing, pricing and compliance requirements.
The move follows amendments introduced through the Tax Laws (Amendment) Act, 2024, which laid the legal foundation for extending the remission framework beyond beer to include spirits.
The regulations also repeal the 2017 regime and establish a more structured system governing eligibility, monitoring and reporting.
According to an analysis by PwC Kenya, the revised regulations create opportunities for manufacturers to improve competitiveness while strengthening local agricultural value chains by rewarding companies that source raw materials from Kenyan farmers.
“To qualify, the regulations also introduce product-specific packaging and retail price limits aimed at ensuring the tax benefit supports affordable products targeted at the local market,” added PwC partner tax & legal services Job Kabochi.
Beer qualifying for remission must retail at no more than Sh150 per litre, while spirits are capped at Sh350 per litre and wine at Sh750 per litre.
Packaging requirements have also been defined, with spirits required to be sold in packages of at least 250 millilitres and wine in containers of at least one litre.
The regulations narrow eligibility for spirits by limiting remission primarily to distilled spirits containing Extra Neutral Alcohol (ENA) exceeding 90 per cent alcohol by volume.
According to the experts, licensed distillers may also qualify where they compound their own spirits under prescribed conditions.
Products made from sugarcane and barley, spirits with alcohol content of 90 per cent or below, and products destined for export or eligible for rebates are excluded from the remission programme.
According the the new regulations, Manufacturers seeking the tax relief must now demonstrate tax compliance, maintain valid excise licences, integrate with the Electronic Goods Management System (EGMS) and install flow meters.
They are further required to comply with eTIMS and apply prescribed remission labels on qualifying products.
The firms, will also be required to submit quarterly returns, including flow meter data, replacing the monthly reporting requirement under the previous framework.
“Another notable feature is the introduction of mandatory farmer traceability and verification of locally sourced agricultural inputs. Manufacturers will be expected to maintain records demonstrating where raw materials originate, creating greater transparency across the supply chain while supporting the government’s local content agenda,” added Mwaniki.
The regulations provide existing beer manufacturers currently enjoying remission with a six-month transition period to align their operations with the new compliance framework before stricter enforcement begins.
