Kioo warns Kenya’s proposed 35% excise duty on EAC glass bottles threatens regional trade, supply chains

TANZANIA – Kioo Limited has warned that Kenya’s proposed 35% excise duty on EAC glass bottles threatens its export business, with the Tanzanian manufacturer expected to supply 40,000 metric tonnes to Kenya this year.

The Kenyan Finance Bill, 2026, published on 5 May 2026, proposes to delete the proviso exempting glass bottles imported from EAC Partner States from excise duty, thereby subjecting such imports to excise duty at 35%, except for glass bottles imported for pharmaceutical products. 

Based on projected export volumes, the levy would impose an estimated additional cost burden of about US$7.7 million on imports valued at approximately US$22 million. 

The proposed duty would remove the preferential treatment currently accorded to EAC-origin glass bottles and significantly increase the cost of sourcing glass packaging within the region.

A Repeat of 2020

In 2021, the East African Court of Justice ruled in favour of Kioo after Kenya introduced a 25% excise duty on imported glass bottles, including those originating from EAC partner states, through the Business Laws (Amendment) Act, 2020. 

Kioo challenged the measure on the grounds that it was discriminatory, anti-competitive, and inconsistent with Kenya’s obligations under the EAC Treaty. 

The Court suspended implementation of the excise duty, noting its potential discriminatory and anti-competitive effects on regional trade. 

Kenya appealed, but the appeal was later struck out by the EACJ Appellate Division. Parliament subsequently amended the Excise Duty Act through the Finance Act, 2021, to expressly exempt glass bottles imported from EAC countries from excise duty.

Regional Trade Implications

Vineet Verma, Kioo General Manager, explained that the proposed amendment raises serious concerns under the EAC Customs Union framework, particularly regarding the free movement of goods within the Community. 

The proposed excise duty would materially increase packaging costs for manufacturers and consumers in Kenya, making Kioo’s products less competitive compared to locally manufactured glass bottles in Nairobi. 

Kenya’s glass packaging deficit means that without Tanzanian imports, Kenyan beverage and food manufacturers would face supply shortages, potentially slowing production lines and increasing costs for consumers.

When a Bottle Crossing the Border Becomes a Trade Dispute

A glass bottle manufactured in Tanzania and filled with soda in Kenya is not an import, it is regional integration in practice. 

Kenya’s proposed 35% duty would treat that bottle as foreign, not as EAC-origin. Kioo’s warning is not about lost sales; it is about broken agreements. For the EAC’s customs union, that distinction is not technical, it is foundational.

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