National Treasury Cabinet Secretary John Mbadi.
Kenya is set to offer relief on excise duty on spirits and wine manufactured from local agricultural produce, joining Uganda and Tanzania, which already deploy the strategy to boost home producers.
The Cabinet Secretary for National Treasury John Mbadi has published draft regulations on the remission of excise duty, which for the first time, will include spirits and wine made from locally grown agricultural products.
Currently, only beer produced from locally grown crops, such as sorghum, millet, and cassava, is eligible for excise duty remission of up to 80 per cent. Senator Keg, made from sorghum by the East African Breweries Limited (EABL), is the only beer that enjoys this excise duty remission.
However, the Tax Law Amendment Act 2024 expanded the scope of the excise duty remission to include spirits, explaining the publishing of draft Excise Duty (Remission of Excise Duty) (Amendment) Regulations, 2025.
These regulations introduce conditions on the packaging and pricing of spirits and wines produced from locally grown crops to enjoy relief on payment of excise duty. The spirits should be sold in containers of not less than 250ml.
Besides making spirits cheap for millions of low-income consumers, the government hopes that the move can boost employment by offering a steady market for farmers growing these crops. Kenya imports most of its spirits, including premium whiskies such as Johnie Walker brands owned by British multinational Diageo, the majority owner of EABL.
Adoption of the regulation will put the country at par with its East African neighbours of Uganda and Tanzania, which offer excise duty relief on spirits manufactured using locally produced raw materials.
In the regulations, a distillery will be expected to install a flowmeter regulated at 20 degrees centigrade at the discharge point to the compounder.
Unlike a distillery, which produces alcohol from raw materials such as grains, fruits, sugarcane, or molasses, a compounder mixes or blends different ingredients typically with other substances like flavourings, colourings, or sweeteners to create a new alcoholic product, usually spirits or wines.
