Kenya tax threatens Tanzania glass exports
DAR ES SALAAM: KIOO Limited has cautioned that Kenya’s proposed 35 per cent excise duty on glass bottles imported from East African Community member states threatens its export business and could disrupt regional trade and manufacturing supply chains.
Kioo Limited General Manager Mr Vineet Verma said they have already written a letter of complaint to the Tanzania’s Minister for Industry and Trade Ms Judith Kapinga, the Minister for Finance, Amb Khamis Omar Mussa, the Minister for Planning and Investment, Prof Kitila Mkumbo and the Minister for Foreign Affairs and East African Cooperation, Amb Mahmoud Thabit Kombo.
“This proposed amendment would remove the preferential treatment currently accorded to EAC-origin glass bottles and significantly increase the cost of sourcing glass packaging within the region.
“This raises serious concerns under the EAC Customs Union framework, particularly regarding the free movement of goods within the Community,” he noted.
Kioo, East and Central Africa’s largest glass packaging manufacturer, has invested over 125 million US dollars in expanding the plant’s operations and capabilities over the past 10 years and employs over 900 employees and supports many more indirectly through its regional operations and supply chains.
The firm manufactures container glass for the soft drink, beverage, beers, alcohol and food industries in East and Central Africa.
Kioo operates one of the region’s most technologically advanced glass manufacturing facilities, producing highquality and lightweight glass solutions for its customers.
The General Manager said 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 the rate of 35 per cent, except for glass bottles imported for pharmaceutical products.
He noted that as Kioo exports substantial volumes of glass bottles to Kenya, the proposed excise duty would materially increase the cost of the manufacturer’s products in the Kenyan market, rendering them less competitive compared to locally manufactured glass bottles in Nairobi.
He said Kenya remains an important market for Kioo’s products, noting that the country’s container glass market has an estimated annual demand of about 120,000 metric tonnes, while the combined production capacity of its two major manufacturers is around 63,000 metric tonnes, leaving a substantial supply deficit.
He said Kioo plays a critical role in bridging the supply gap and is expected to supply about 40,000 metric tonnes of glass bottles to the Kenyan market this year alone. Currently, about 32 per cent of the company’s export volumes are destined for Kenya.
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“The proposed excise duty would therefore materially increase packaging costs for manufacturers and consumers in Kenya. Based on projected export volumes, the levy would impose an estimated additional cost burden of about 7.7 million US dollars on imports valued at approximately 22 million US dollars,” he said Mr Verma said that in 2021 the East African Court of Justice ruled in favour of Kioo after Kenya, through the Business Laws (Amendment) Act, 2020, introduced a 25 per cent excise duty on imported glass bottles, including those originating from EAC partner states.
“Kioo challenged the measure before the EACJ on the basis that it was discriminatory, anti-competitive and inconsistent with Kenya’s obligations under the Treaty for the Establishment of the East African Community, particularly the principles relating to regional integration, non-discrimination and the free movement of goods within the common market,” he explained.
The Court found merit in the challenge and suspended implementation of the excise duty, noting its potential discriminatory and anti-competitive effects on regional trade. Kenya appealed the decision, but the appeal was later struck out by the EACJ Appellate Division in Appeal No. 3 of 2021.
“The dispute subsequently prompted legislative reconsideration of the excise duty framework, culminating in Parliament amending the Excise Duty Act through the Finance Act, 2021 to expressly exempt ‘glass bottles imported from any of the countries within the East African Community’ from excise duty,” concluded Mr Vema.
