Stocks of bottled water manufactured or imported before July 1, 2026 have been exempted from a directive requiring traders and manufacturers to surrender all unused excise stamps after the commodity was removed from the list of excisable goods through the Finance Act, 2026.
‘Taxpayers holding unused V4 excise stamps for bottled water as at 1 July 2026 are required to return the stamps to the Kenya Revenue Authority in accordance with these guidelines,’ the Kenya Revenue Authority said.
‘However, taxpayers should note that bottled water lawfully manufactured or imported and stamped before July 1, 2026 may continue to be sold with the affixed stamps.’
The exemption is expected to provide relief to traders and manufacturers who may now avoid the logistical challenges of a multiple-step procedure of surrendering unused stamps.
A schedule by KRA showed that those returning excise stamps would initiate the process by logging in to the Excise Goods Management System (EGMS). Upon submission of the excise stamps return request in the EGMS system, KRA shall process the application and either approve or reject the request.
This would be followed by a physical surrender of the paper stamps before any reimbursements would be processed.
Excise duty on bottled water was charged at Sh6.41 per litre until late last month, when it was abolished by the Finance Act, 2026.
This marked the end of nearly a decade of excise taxation on one of Kenya’s fastest-growing consumer products.
As an excisable product, every bottle of water sold in Kenya was required to bear an excise stamp to track production and confirm that the requisite tax had been paid.
An excise stamp is a revenue marker affixed to excisable goods to demonstrate that excise duty -popularly referred to as the “sin tax”- has been paid by the manufacturer.
The removal of the tax came against the backdrop of a rapidly expanding bottled water market, fueled by growing health consciousness, rapid urbanisation and persistent concerns over the quality and safety of piped water supplies.
The government first introduced excise duty on bottled water through the Excise Duty Act, 2015, as part of broader tax reforms aimed at widening the tax base and increasing domestic revenue collection. The move also reflected an expansion of excise taxation beyond its traditional focus on alcohol and tobacco to include selected non-alcoholic beverages and other consumer goods.
To safeguard revenue collection, KRA requires all licensed manufacturers and importers of excisable goods to purchase digital excise stamps, which are affixed to products before they leave the factory.
The stamps, administered through the EGMS, enable the taxman to monitor production volumes, verify tax payments and curb tax evasion and illicit trade.
Initially introduced for alcoholic beverages and tobacco products, the digital stamps were later extended to bottled water, juices, soft drinks, energy drinks and cosmetics as the government intensified efforts to plug revenue leakages.