At the heart of the Department ‘s submission was the critical push to redefine how goods moving within the bloc are classified. Under Kenya’s current Excise Duty Act, any goods brought into the country from a foreign country, special economic zone, or export processing zone are labeled as imports.

📻 Breaking It Down

NAIROBI, Kenya Jun 11 – East African Community Affairs Principal Secretary Caroline Karugu has called on the National Assembly to expedite the amendment of national tax laws to align with community frameworks and avert an impending trade war with neighboring states.

Appearing before the National Assembly’s Departmental Committee on Finance and National Planning, Karugu cautioned that some provisions in the proposed Finance Bill, 2026 risk undermining regional treaties and triggering heavy trade retaliation against Kenyan exports.

At the heart of the Department ‘s submission was the critical push to redefine how goods moving within the bloc are classified. Under Kenya’s current Excise Duty Act, any goods brought into the country from a foreign country, special economic zone, or export processing zone are labeled as imports.

📌 What You Need to Know

However, this directly contradicts the EAC Customs Management Act of 2004, which defines an import strictly as goods coming from a foreign country outside the bloc, while classifying the movement of goods between partner states as a transfer.

According to the Principal Secretary, labeling EAC goods as imports under Kenya’s tax laws allows them to be subjected to higher excise duty rates than domestic products. This practice has been flagged as discriminatory and a significant contributor to Non-Tariff Barriers (NTBs) within the region.

“Article 8(4) of the Treaty for the establishment of the EAC explicitly provides that Community laws take precedence over national laws on matters of implementation,” she explained to the lawmakers urging the Committee to adopt the regional definition.

PS Karugu raised concern over the omission of this redefinition in the Finance Bill, 2026, stating it places Kenyan market access at extreme risk of reciprocal punitive measures by partner states.

“The EAC market accounts for more than 29 per cent of Kenya’s total annual exports. Partner states are reportedly considering retaliatory measures if Kenya continues to impose discriminatory duties”, PS Karugu noted.

In her submissions, the PS highlighted several key sectors where proposed rollbacks on excise duty exemptions for EAC-originating goods could spark severe diplomatic and economic fallout.

📰 Source: Capital FM Kenya