Manufacturers challenge 433pc rise in industrial sugar excise duty
KAM says the duty on imported industrial sugar rose from Sh7.50 per kilogram to Sh40 per kilogram effective July 1, 2026, increasing the cost of a key input for manufacturers that use sugar in their production processes.
NAIROBI, Kenya – The Kenya Association of Manufacturers (KAM) has taken legal action to contest a staggering 433 percent hike in excise duty on imported industrial sugar. The association argues that this significant tax increase could lead to higher production costs, job losses, and a decrease in the competitiveness of local manufacturers.
KAM filed a constitutional petition at the Milimani High Court against the State Law Office, the Kenya Revenue Authority (KRA), and two other parties, challenging the 2026 Finance Act that introduced the duty increase. Effective July 1, 2026, the excise duty on imported industrial sugar was raised from Sh7.50 per kilogram to Sh40 per kilogram, which significantly impacts manufacturers that rely on sugar in their production processes.
The association estimates that this tax hike could increase annual costs by Sh6 billion, with capacity utilization potentially dropping by as much as 50 percent and risking around 3,000 jobs. By comparing the duty increase to a 433 percent rise, KAM highlights the substantial financial burden this places on businesses. They also express concerns over Kenya's competitiveness against neighboring countries like Uganda and Tanzania, where the industrial sugar industry does not face a similar excise duty challenge.
This legal move comes amid pressure for manufacturers to manage input costs while competing in the East African Community (EAC) market. The KAM challenge not only targets the economic impact but also questions the process through which the tax increase was introduced, arguing that insufficient public input was considered before the tax change took effect.
Justice David Mburu recently certified the application as urgent, directing the association to serve the petition and other necessary documents on the respondents by the close of business on October 8. The respondents have been given seven days to respond, and the matter is set to be heard on October 15 to confirm compliance and further proceedings.
Written by urgent.news from Capital Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
