Excise duty is a tax on particular goods and services that the government wants to discourage or tax specially, such as alcohol, tobacco, fuel, vehicles and some services. When these goods are imported, excise duty is added to the other taxes, and it can be a large part of the bill.

How it works on imports

For goods that carry excise duty, the usual order is:

  1. The customs value is set; see customs valuation explained.
  2. Import duty is added at the tariff rate.
  3. Excise duty is charged on the customs value plus the import duty, at the excise rate for that product.
  4. VAT is charged on the customs value plus duty plus excise.

Because VAT is charged on the excise too, the effect compounds.

Vehicles

Cars attract excise duty that depends on the engine type and size. Vehicles with larger engines pay a higher rate, and electric vehicles pay a lower one. The rate bands and thresholds are set in the law and change, so check the current schedule, and use the car import duty calculator to see the effect. The age rule and the CRSP valuation also matter; see how much it costs to import a car and importing a used car.

Other goods

Excise duty applies to goods such as:

  • Alcoholic drinks and beer
  • Tobacco products, where rates were increased in recent Finance Acts
  • Fuel and some petroleum products
  • Some soft drinks and juices
  • Certain plastic and other products

Rates can be a percentage of value or a fixed amount per unit, such as per litre or per thousand sticks.

Services have excise too

Excise duty also applies to services such as mobile airtime and data, mobile money transfer fees and betting; the excise duty calculator covers them. Recent changes cut the excise on betting stakes and changed how winnings are taxed, as summarised in betting tax changes.

An example

An item with a customs value of KES 1,000,000, import duty at 25% (KES 250,000) and excise at 20% of 1,250,000 (KES 250,000) gives a VAT base of KES 1,500,000. VAT at 16% is KES 240,000. The total taxes are KES 740,000 before the declaration fee and levy; see IDF and RDL explained.

Who must register

Manufacturers and importers of excisable goods must be licensed and file excise returns, and some goods require excise stamps. If you import excisable goods regularly, speak to KRA about the licence and the returns before you place your first order.

Add it to your landed cost

Excise is part of the cost of the goods. Include it in your pricing; see how to calculate import duty on goods and use the import duty and landed cost workbook, which has a duty rate for each line.

Check the current rates

Excise rates are among the most frequently changed rates in the Finance Acts. Always look at the rate in force on the date of import.

Excise rates and rules are set by the Excise Duty Act and its schedules. Confirm the rate for your goods with KRA.