The National Assembly has passed the Excise Duty (Amendment) Bill, 2025, which will see the scrapping of excise duty on select imported products.
The bill proposed to scrap excise duty on items like fully assembled electric transformers, which have been the subject of debate in recent months.
Excise duty on transformers was initially imposed under the Tax Laws (Amendment) Act, 2024, to promote the local assembly of the crucial item for power distribution.
This, however, did not pan out as the government expected, as the 25 per cent duty slapped on imported transformers led to heightened costs for importing essential components and subsequently affected transformer manufacturing.
Following the passing of the amendment bill, it will be subject to the president's assent before officially becoming law in a move that could potentially make it cheaper for companies investing in the electricity sector to import essential equipment like transformers.
The removal of the tax could also see the government lower operational costs for players in the electricity sector, enabling them to manufacture and supply more transformers.
Besides transformers, the government had also slapped excise duty on several other imports under the Tax Laws (Amendment) Act, 2024, including imported printing ink, except for imports from East African Community (EAC) partner states which comply with the EAC Rules of Origin.
In addition, ceramic sanitary (5 per cent), polished glass (35 per cent of the customs value) and coal (2.5 per cent) were also subjected to excise duty.
Certain types of polymers—such as saturated polyester, vinyl acetate polymers, and styrene acrylic emulsions—were also slapped with a 20 per cent tax on the customs value.
With the Excise Duty (Amendment) Bill, 2025, on the verge of becoming law, one of the biggest beneficiaries will be companies operating in the electricity sector, since the tax exemption is expected to cut down on essential power distribution components which could potentially lead to improved electricity access because of faster power installation.
A statement from the official Parliament of Kenya page echoed this intention, noting, “If enacted, this amendment is expected to lower electricity costs and improve power connectivity by facilitating increased manufacturing and supply of transformers to the Kenya Power and Lighting Company.”
The timing of the bill is also critical as it came at a time when Kenya Power, the country’s main electricity distributor, was racing against time to address a transformer shortage which stalled new connections.
An emergency procurement process was initiated in April 2025, with the company targeting the acquisition of 3,319 transformers within just 14 days.
