Excise duty structures vary depending on the product type, using either physical measurements or monetary values to compute the tax liability.
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| Specific Rates | | Ad Valorem Rates |
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(Tax based on physical unit) (Tax based on monetary value)
* Liters of pure alcohol * Ex-factory selling price
* Number of cigarette sticks * Transaction value of services
* Kilograms of plastic bags * CIF value for imported goods
Specific Excise Rates
A specific rate is a fixed monetary tax amount charged per physical unit of the good. It ignores the monetary price of the item.
- Examples: KES 150 per liter of spirits, KES 4,000 per mille (1,000 sticks) of cigarettes, or KES 20 per kg of sugar confectionary.
- Advantage: Highly predictable for the government and easy to administer because it only requires counting or measuring physical volumes.
Ad Valorem Excise Rates
An ad valorem rate is a percentage tax levied on the taxable value of the good or service.
- Examples: A 15% excise duty on telephone and internet data services, or a 35% duty on luxury passenger motor vehicles.
- Valuation Rules (Local Goods): For locally manufactured items, the value is usually the ex-factory selling price, excluding VAT and the excise duty itself.
- Valuation Rules (Imported Goods): For imports, the value is calculated as the Customs Value (CIF) plus the applicable Customs Import Duty.