Excise Duty on Water: What You Must Know
One of the most debated questions in Kenya’s tax system is whether a natural resource like water should be taxed. To clarify, tap water or water drawn directly from a natural source is not taxed. However, when water is purified, bottled, or refilled for sale, it becomes an excisable product and attracts excise duty.
What Is Excise Duty?
Excise duty is a tax charged on specific goods and services manufactured in or imported into Kenya, as outlined in the Excise Duty Act (2015). This includes bottled or refilled water intended for commercial sale.
There are two primary categories of players in the water business:
- Bottlers – companies that package purified water in sealed bottles.
- Refillers – businesses using automatic dispensers (water ATMs) to sell water.
Both categories are required to comply with excise tax obligations.
Excise Duty Requirements for Water Bottlers and Refillers
Following the Finance Act 2020, any person or company involved in bottling or refilling water must:
- Obtain an excise license from the Kenya Revenue Authority (KRA)
- Affix excise stamps on every bottled product
- Pay excise duty on each unit or litre sold
Selling water without fulfilling these requirements is an offence. Products that lack excise stamps or are manufactured by unlicensed persons are considered illegal.
Excise Stamps and Water ATMs
KRA is solely responsible for issuing excise stamps, which cost KShs. 0.50 per stamp for bottled water.
However, water sold via ATMs presents a unique challenge, as stamping individual bottles may not be practical. In such cases:
- Sellers must still obtain an excise license
- They are required to remit KShs. 5.47 per litre of water sold monthly
Excise license applications can be initiated online via the iTax portal:
👉 https://itax.kra.go.ke/KRA-Portal/
Final Thoughts
Understanding excise duty on water is vital for anyone in the bottled or refilled water business. Whether you’re a startup using a water ATM or a full-scale bottling company, compliance with KRA licensing and stamp regulations is mandatory.
Avoid penalties and ensure your operations are lawful by staying informed about the correct excise duty requirements.
