Excise duty returns and payments in Kenya
When a Kenyan business registers for excise duty, when domestic and import excise is paid, the late filing penalty, and how to keep excise in the books.
By Achekam · · 4 min read · For Running a business businesses in Kenya
Excise duty tends to arrive in a business by surprise. A bakery starts bottling its own juice. A distributor begins importing a line of spirits. A small brewer moves from a hobby to a licensed operation. Suddenly there is a tax with its own registration, its own return and its own deadline, on top of VAT and income tax.
Unlike VAT, excise applies to particular goods and services, so many businesses never meet it. Those that do need to get the basics right from the first month. This article sets out what KRA says about registering, paying and filing, at the time of writing, and how to keep excise visible in your accounts.
Who must register
KRA says a person who expects to manufacture or import excisable goods, or to supply excisable services, must apply to the Commissioner to be registered. The same rule covers anyone who has accrued, or expects to accrue, a liability under the Income Tax Act or the VAT Act.
The key word is "expects". Registration is meant to happen before the first excisable sale or import, not after KRA notices. If you are planning a new product line, check whether it is excisable while you are still costing it. Whether you need a PIN for related transactions is covered in transactions that require a KRA PIN.
Customers and suppliers can check your status too. The iTax portal offers a public checker for excise licences, alongside its PIN and certificate checkers.
When excise is paid: domestic and imports
KRA draws a clear line between two kinds of excise:
| Kind | When it is paid |
|---|---|
| Domestic excise duty | By the 20th day of the following month |
| Excise duty on imports | At the port of entry |
So a manufacturer selling locally works to a monthly cycle, settling each month's excise by the 20th of the next. An importer pays as the goods come in, alongside the other import charges. A business that both manufactures and imports deals with both.
KRA's page on filing and paying taxes for companies and partnerships sets out the payment dates for excise duty and the other taxes a company files. Check it for the current position before you plan your cash flow.
Importers also have documentation to keep for the goods they bring in; the new requirements are explained in export documents importers must now keep.
The late filing penalty
KRA says late filing of an excise duty return attracts a penalty of 5% of the tax due or Kshs 10,000, whichever is higher.
As with other "whichever is higher" penalties, the fixed amount bites hardest on small producers. A month with little excise due still carries the minimum if the return is late. The monthly rhythm makes it easy to slip once, so put the date in front of a named person every month.
Excise stamps and the EGMS check
Some excisable goods carry excise stamps. KRA says its Excisable Goods Management System (EGMS) can be used to verify the authenticity of excise stamps.
That check is useful for anyone buying excisable goods for resale. A retailer or distributor can check stamps before accepting stock, rather than discovering later that goods on its shelves carry stamps that do not verify.
Excise income declared through eTIMS
Excise does not sit outside electronic invoicing. KRA says all persons carrying on business must be registered on TIMS or eTIMS, and that the income to be declared through TIMS or eTIMS includes that of taxpayers with excise duty obligations. Excisable sales go through eTIMS like any other sale. For which transactions need an eTIMS invoice, see which transactions need eTIMS.
Recording excise in Achekam
Achekam's Kenyan tax computations, once their rules are approved, cover corporation tax, instalment tax, VAT, withholding tax, turnover tax, capital gains tax and stamp duty. Excise duty is not on that list. Work out the excise outside Achekam, for example with your tax adviser or KRA's own tools, and then record it in the books.
The books can carry it cleanly:
- An excise payable account. Each business has its own ledger with a standard chart of accounts, and accounts can be added. Set up a liability account for excise duty so the amount owed is always visible.
- A monthly journal. A business can post manual journals. An unbalanced journal, or one dated in a closed month, is refused, and a posted journal is corrected only by a reversal, so the excise history stays intact.
- The payment. Achekam records a Kenyan tax payment with KRA's own reference, the PRN, and receipt. It never generates a payment reference, refuses the discontinued paybill 572572, and needs a second person to confirm the payment.
Achekam does not file Kenyan returns. A person with the KRA filing permission files the excise return on iTax and uploads the acknowledgement, and a different person verifies it before the return counts as filed.
A monthly excise routine
- Total the month's excisable production or sales.
- Compute the excise due and post it to the excise payable account.
- File the return on iTax and upload the acknowledgement.
- Pay by the 20th of the following month using the PRN from iTax.
- Record the payment and have a second person confirm it.
- Check the excise payable account is back to nil.
Name one person who owns excise this month, and give them the 20th as a fixed date in their diary.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
