The Kenya Revenue Authority stands to collect an estimated Sh41.5 billion in capital gains tax from Diageo’s sale of its 65% stake in East African Breweries Limited to Asahi Group Holdings, according to a May 27, 2026 report
The levy applies because the transaction is structured as a private transfer of Diageo Kenya Limited, the holding vehicle through which Diageo controls its EABL stake, rather than a direct purchase of shares on the Nairobi Securities Exchange. Under Kenyan law, only shares traded on the NSE carry a CGT exemption. Private contractual transfers do not. The 15% rate applies to net gains, which KRA calculates as the Sh307 billion sale price less Diageo’s initial investment of roughly Sh30 billion, leaving a taxable gain of approximately Sh277 billion.
For KRA, the timing is notable. The authority collected a record Sh35 billion from financial and capital transactions in the first nine months of the current financial year ending June 2026, against annual projections of Sh20.1 billion for the current year and Sh21.1 billion for the next. A single deal more than doubling that trajectory sharpens the case for why private corporate transfers have become a KRA priority.
The deal has a precedent. In 2017, KRA collected roughly Sh16 billion from Vodafone’s transfer of its 35% Safaricom stake, held through Vodafone Kenya Limited, to Vodacom. KRA confirmed at the time that the direct transfer triggered CGT, with taxes and duties totalling Sh15.97 billion.
The EABL transaction arrives as Kenya moves to close a structural gap in its tax framework. Kenya’s Finance Bill 2026, tabled before parliament in April, proposes to extend CGT to offshore sales by non-resident investors where shares derive their value from Kenyan assets, even when the transaction occurs outside the country. Legal analysis by Cliffe Dekker Hofmeyr notes the proposal also removes the minimum 20% underlying ownership threshold previously required to trigger CGT on indirect transfers, significantly broadening the scope of taxable transactions. Tax advisers warn the expanded definition could complicate future deal structures across sectors, including minority investor exits and internal group reorganisations.
Steve Okoth, Tax Advisory Director and Regional Head of Tax at BDO East Africa, told Business Daily that KRA’s position on the EABL transaction is that it constitutes a private contractual transfer of securities rather than an exchange-traded transaction, which is what activates the CGT liability.
Asahi is acquiring Diageo Kenya Limited, which holds the 65% EABL stake, along with Diageo’s 53.68% direct shareholding in UDVK, the Kenyan spirits business. Completion remains subject to regulatory approvals and is expected in the second half of 2026. EABL, which operates across Kenya, Uganda and Tanzania, reported net sales of approximately $996 million in its fiscal year 2025.
Drinkabl.media’s May coverage of Dewji’s $50 million Kenya soft drinks plant traced how foreign capital is moving into East Africa’s beverage market from both directions: multinationals exiting, and new entrants arriving. January reporting on Coca-Cola HBC’s $3.4 billion acquisition of Africa’s largest Coca-Cola bottler showed the same consolidation logic operating across the continent. Bia Tosha Distributors, which filed a legal challenge to halt the Diageo sale over its pending court case against EABL, has appealed after the High Court dismissed its initial application. That appeal, not the tax liability, is now the most immediate timing risk to closing.
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