Manufacturers Sue Government Over Ksh40 Sugar Tax in Finance Act 2026
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The Kenya Association of Manufacturers (KAM) has moved to the Milimani High Court seeking to overturn a Finance Act 2026 provision that increased excise duty on imported sugar from Ksh 7.50 to Ksh 40 per kilogramme.
In a petition filed on October 6, through Okwach & Company Advocates, KAM named the State Law Office, the Kenya Revenue Authority (KRA) and two others as respondents.
“KENYA ASSOCIATION OF MANUFACTURERS VS State Law Office AND Kenya Revenue Authority AND 2 Others,”
KAM Challenges Public Participation in Finance Act
According to the petition, KAM argued that the enactment of the provision did not involve meaningful public participation as required under the Constitution.
KAM asked the court to declare that Section 36(a)(vi) contravenes Articles 10(2)(a), 118(1)(b) and 201(a) of the Constitution, which provide for principles including public participation and responsible taxation.
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The association also wants the provision declared null and void, arguing that the legislative process did not meet the constitutional requirements.
“A DECLARATION that the enactment of section 36(a)(vi) of the Finance Act, 2026 was undertaken in contravention of Articles 10(2)(a), 118(1)(b) and 201(a) of the Constitution of Kenya, 2010, for want of meaningful public participation, and that the said provision is accordingly null, void and of no legal effect,” KAM stated.
The petition also challenged the discriminatory treatment introduced under the new excise duty provision. It highlighted that the law exempts registered pharmaceutical manufacturers and licensed sugar refineries.
However, the manufacturers argued that these exemptions lack a clear and rational basis, contending that the provision denies KAM members equal protection and equal benefit under the law.
As a result, the association asked the court to find that the provision violates Article 27 of the Constitution, which guarantees equality and freedom from discrimination.
Manufacturers Challenge Ksh40 Rate on Imported Sugar
KAM challenged the application of the Ksh 40 excise duty on imported sugar used as a manufacturing input.
The association argued that authorities impose the duty before determining the sugar’s ultimate lawful use and without providing sufficient evidence to justify the rate.
According to the petition, this makes the tax disproportionate and inconsistent with the nature and purpose of excise duty.
The manufacturers also challenged the overall tax burden created by the new excise duty.
According to the petition, KAM argued that the provision fails to distribute the burden of taxation fairly and results in unnecessary duplication and cumulative over-taxation of a particular category of taxpayers.
The association wants the court to determine whether the provision complies with Article 201 of the Constitution, which sets out principles governing public finance.
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KAM further argued that the provision is irrational and arbitrary and violates the economic rights of its members and their employees under Article 43 of the Constitution.
Meanwhile, among the key orders sought by KAM is the quashing and setting aside of the amendment introduced through Section 36(a)(vi) of the Finance Act, 2026.
The association wants the previous excise duty rate on imported sugar to be restored.
KAM is also seeking a permanent injunction restraining the relevant authorities from assessing, demanding, levying, collecting or enforcing the Ksh40 per kilogramme excise duty imposed under the disputed provision.
The manufacturers have further asked the court to award them the costs of the petition, alongside any other relief it considers just and appropriate.
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Kenya Association of Manufacturers (KAM) CEO Tobias Alando speaking at a past event in 2024. Photo/ NCBA Bank