Treasury caps spirit prices at Sh350 to qualify for tax relief
The new proposal marks a major shift from earlier regulations published on May 30, which had placed the retail price of spirits at between Sh1,000 and Sh1,200 per litre for them to access excise duty remission.
The Treasury has introduced new draft rules that will cap the retail price of spirits made from locally grown crops at Sh350 per litre for manufacturers to qualify for excise duty waivers.
According to Treasury Cabinet Secretary John Mbadi, the Excise Duty (Remission of Excise Duty) Regulations, 2025, seek to extend the 80 per cent excise tax relief to spirits and wine produced from crops such as sorghum, millet, and cassava.
At present, only beer brewed from locally grown produce enjoys this waiver, with Senator Keg made from sorghum by East African Breweries Limited (EABL), being the main beneficiary.
The new proposal marks a major shift from earlier regulations published on May 30, which had placed the retail price of spirits at between Sh1,000 and Sh1,200 per litre for them to access excise duty remission.
That price band has now been scrapped, and the ceiling reduced by 70.8 per cent to Sh350 per litre.
The draft regulations also eliminate the price floor across all alcoholic drink categories eligible for the waiver.
By broadening the duty remission scheme beyond beer, the government aims to boost local farming, reduce dependence on imported raw materials, and curb the consumption of unsafe alcohol among low-income households.
“The objective of these regulations is to provide a framework for the remission of excise duty on beer, spirits, or wine manufactured from agricultural products grown in Kenya,” said Mbadi in the notice.
He added that the policy would assure farmers, especially those cultivating cassava, millet, and sorghum, of a “reliable and sustainable market for their produce.”
Under the proposals, wine must contain at least 75 per cent sorghum, millet, cassava, or other crops grown in Kenya, be packaged in wooden barrels of at least 30 litres, and retail at no more than Sh700 per litre.
Producers will also be required to show tax compliance and provide a list of contracted farmers supplying the raw materials.
The earlier version of the regulations had drawn resistance from EABL, which had been lobbying for flexibility that would allow it to raise the retail price of Senator Keg. If the new draft is adopted, the brewer will now be able to increase the price of Senator Keg for the first time in eight years.
