Kenya Revenue Authority (KRA) has announced that bottled water manufactured in or imported into the country will no longer attract excise duty.

The tax exemption follows critical legislative amendments introduced under the Finance Act, 2026, which formally restructured the First Schedule to the Excise Duty Act (Cap 472), removing bottled water from the list of excisable goods.

In a public notice issued on Monday July 6, the tax authority clarified that this new tax-free regime legally took effect on July 1, 2026, meaning that water bottled or imported on or after this date will be entirely exempt from the levy and will no longer require the mandatory digital excise stamps.

While the tax relief offers a major reprieve for water bottlers and consumers moving forward, the taxman has warned manufacturers that the exemption is not retroactive.

The authority has strictly directed all local manufacturers to fully clear their outstanding tax obligations for the month of June before transitioning into the new framework, reminding them to file their June 2026 Excise Duty Returns and pay all taxes due by the July 20, 2026 deadline.

The sudden removal of the tax has left many local water manufacturers and importers holding large inventories of pre-purchased, unused digital excise stamps.

To address this, the KRA stated that further guidance will be issued to explain how stakeholders should handle these excess assets.

According to the notice, the Commissioner will soon publish detailed guidelines on the official KRA website outlining the procedures for returning unutilised excise stamps and decommissioning the digital tracking stamps.

In the meantime, the authority has advised affected taxpayers to monitor official communication channels for these forthcoming updates and encouraged anyone seeking immediate clarification to reach out directly to the KRA Enforcement Division via the provided telephone lines or official email addresses.