Finance Act 2025 – Excise Duty Act Changes and What They Mean for Your Business
The Finance Act, 2025, assented to on 26 June 2025, has introduced sweeping changes to the Excise Duty Act (Cap. 472). These reforms modernise tax rules to keep pace with Kenya’s rapidly evolving digital economy, manufacturing sector, and compliance landscape.
At UHY Kenya, we’ve unpacked these updates so you can understand their impact and prepare your business accordingly.
1. Redefined “Digital Lender”
The Act now defines a digital lender as a person providing credit through electronic means, excluding:
- Licensed banks under the Banking Act
- Registered SACCOs under the Co-operative Societies Act
- Licensed microfinance institutions under the Microfinance Act
This narrower definition changes who is subject to excise duty obligations in fintech lending.
📖 Reference: Kenya Banking Act
2. Broader Scope for Taxable Digital Services
Excise duty now applies to any service offered via the internet, electronic networks, or digital marketplaces, not just those delivered through narrowly defined “digital platforms.”
This brings:
- Foreign streaming services
- Online education platforms
- Digital advertising providers
…squarely into the Kenyan excise tax net.
For clarity, a “non-resident person” is now formally defined as someone outside Kenya, ensuring foreign providers supplying services into Kenya are captured.
3. New Definition of “Digital Marketplace”
A digital marketplace is now any online or electronic platform that enables users to sell or provide goods, services, or property to others. This definition aligns excise law with the rise of e-commerce and gig platforms.
🔍 Related: Common VAT Compliance Mistakes in Kenya
4. Taxability of Foreign Digital Services Consumed in Kenya
Even if a service is supplied from abroad, if it’s consumed in Kenya via the internet or a digital marketplace, it is now taxable here.
This change affects foreign companies in sectors such as:
- Streaming
- Online gaming
- Cloud services
5. Faster Excise Licensing Decisions
The Commissioner must now respond within 14 days to excise license applications once all required documents are submitted improving certainty for manufacturers and importers.
6. Mandatory Licensing for Ethanol and Methanol Handling
All businesses handling methanol or ethanol including importers, distributors, and processors must now obtain a KRA license.
This move targets illicit alcohol production and strengthens supply chain compliance.
📄 Reference: Kenya Revenue Authority – Licensing
7. Microdistiller Recognition & Relief
The Act defines a microdistiller as a small-scale manufacturer producing up to 100,000 litres of spirituous beverages annually using a still not exceeding 1,800 litres.
Licensed microdistillers are now exempt from costly compliance measures like continuous piping and automation, though production will be tracked via excise stamps.
8. Changes in Duty Rates
Key changes include:
- Agricultural Imports – Excise removed on eggs, onions, and potatoes
- Plastics & Films – 25% or KES 200/kg, whichever is higher
- Alcohol Inputs – KES 500/litre on extra neutral alcohol
- Betting & Gaming – Excise reduced from 15% to 5% on deposits
- Virtual Asset Services – New 10% excise on fees charged
- Green Tech Devices – 25% on direct air capture machines
For a full VAT-related breakdown, see our Finance Bill 2025 VAT Amendments.
9. Exempt Supplies Expanded
Goods and services for Defence Forces Welfare Services are now fully exempt from excise duty.
How This Impacts Your Business
The amendments will:
- Expand the tax net to cover more digital and cross-border services
- Tighten compliance on regulated substances
- Provide relief for small-scale producers
- Adjust duty rates across multiple sectors
📞 Need Expert Guidance?
Whether you’re navigating digital service taxability, rethinking supply chain compliance, or adjusting to new duty rates, UHY Kenya’s tax advisory team can help.
Call us: +254 758 860047
Visit: www.uhy-ke.com
Related Reading
KRA Excise Duty Act
Common VAT Compliance Mistakes in Kenya
Finance Bill 2025 VAT Amendments
Finance Bill 2025 Excise Duty Act Changes
