1. Introduction

Section 40 (a) (ii) of the Finance Act, 2025 amended Section 2 (1) of the Excise Duty Act, CAP 472 by inserting the following new definition:

Section 15 (1) of the Excise Duty Act, CAP 472 requires licensing of the following persons undertaking the following activities:

1. The manufacture of excisable goods in Kenya;
2. The importation into Kenya of excisable goods specified by the Cabinet Secretary under Section 28 as requiring an excise stamp;
3. The supply of excisable services;
4. The use of spirit or illuminating kerosene to manufacture goods in Kenya that are not excisable goods; or
5. The carrying out of any other activity in Kenya for which the Commissioner, by notice in the Gazette, may impose a requirement for a licence.

Further, Section 45 of the Finance Act, 2025 amended Section 25 of the Excise Duty Act, CAP 472 by inserting the following new subsections immediately after subsection (2):

The following procedures have been developed to guide the processing of applications for licensing micro-distillers.

2. Application and Documentary Requirements

An application for an Excise License will only progress where a taxpayer is a first-time applicant and the production process strictly involves fermentation and distillation. The application process shall follow the steps outlined below. The applicant shall:

1. Apply through iTax.
2. Submit all documents as per the requirements in the checklist (Appendix 2) to the Micro & Small Taxpayers Enforcement Division (MSTED) office or via exciselicensing@kra.go.ke.
3. Execute an Excise Security Bond in line with the provisions of the Excise Duty Act, 2015 and Excise Duty Regulations, 2020.

3. Processing of Applications

1. Applicants shall be notified through their iTax-registered email address of the requirements as prescribed in Appendix 2 upon application on iTax.
2. Applicants shall submit all documents physically to the Micro and Small Taxpayers Enforcement Division (MSTED) Office.
3. Applications will be verified at MSTED to confirm the completeness of the requisite documents.
4. If documents are incomplete, the applicant shall be notified via their iTax-registered email to submit the missing documents within two (2) working days.
5. Where documents are complete and verified, MSTED shall carry out an inspection of the premises to ascertain compliance with Section 25 of the Excise Duty Act, 2015, within seven (7) working days.
6. Unsupported applications shall be rejected within fourteen (14) working days from the date of application.
7. Complete applications shall be processed within fourteen (14) working days from the date of submission.
8. The applicant shall pay the registration fee as prescribed by the Excise Duty Regulations 2020 before licence issuance.
9. Upon approval and issuance of the Excise Licence, the applicant shall apply for Excise Stamps in the Excisable Goods Management System (EGMS).

4. Compliance Requirements for Micro Distillers

A micro-distiller shall comply with all applicable laws and regulations governing manufacturers of excisable products, except where exemptions specifically apply to micro-distillers. The requirements include, but are not limited to:

1. Premises must include separate areas for office, production, raw-materials storage, and finished-goods storage.
2. Taxpayer CCTV cameras must enable remote viewing of factory operations by the Commissioner.
3. Taxpayers must provide all fittings required by the Commissioner for securing the factory and plant by way of locking or sealing.
4. Each plant item must be clearly marked and colour-coded as follows:

1. Spirits – red
2. Wash or worts – blue
3. Molasses – green
4. Low wines or feints – brown
5. Water – yellow

5. Raw materials used in the manufacture of excisable goods must be kept in a secure storage facility allowing full accountability.
6. Taxpayers shall share monthly production schedules a week before each month begins.
7. Production shall be strictly under the supervision of a Resident Officer.
8. Finished excisable goods shall be transferred to a room clearly marked “EXCISE STOCK ROOM.”