The agriculture sector has raised concerns over unpredictable tax policies, which they say are threatening its future.
At a recent high‑stakes meeting convened by Agriculture Cabinet Secretary Mutahi Kagwe, agribusiness leaders pushed hard for a decade-long, predictable tax regime, warning that shifting rules are making long-term investments painfully risky.
During the forum, representatives from farmer associations, processors, and value‑chain businesses handed over a detailed memorandum to National Treasury Principal Secretary Chris Kiptoo and Council of Governors Chair Ahmed Abdullahi. Their contention is straightforward: without stability, the sector’s competitiveness is eroding, and many are rethinking their long-term plans.
A core demand centres on Value-Added Tax (VAT). Players in the sector want VAT on key agricultural inputs and produce to be harmonised and locked in for ten years, ideally zero-rated or exempt.
This, they argue, would allow for reliable financial planning, something that’s currently undercut by the erratic fiscal landscape.
Another major pressure point is delayed VAT refunds. The sector claims the government owes more than Ksh 150 billion, a liability that has forced some companies to slim down operations or even shut entirely.
Their proposal to break the impasse is a one-off special bond that would settle these outstanding dues and stabilise cash flows for agribusinesses.
Taxation on packaging materials also came under heavy criticism. Inputs such as Kraft paper currently attract duties as high as 60 per cent, pushing production costs sky-high and weakening the export potential of Kenyan goods.
As a partial response, the government has already waived some packaging taxes, particularly in the tea sector, a move meant to lower costs for exporters and support value addition.
On regulatory matters, farmers expressed deep unease with E‑TIMS, the electronic tracking system for produce. They warned that overly strict enforcement could drive small-scale producers into the informal market, undermining transparency and formal trade structures.
County-level levies also drew fire. Stakeholders highlighted the unfairness of cross-county cess and proposed land rates, arguing that some counties are overcharging and distorting market dynamics.
In response, Ahmed Abdullahi conceded that cess collection outside a commodity’s county of origin is problematic and needs urgent correction.
Competition
Export markets are another sore point. Kenyan producers claim they are losing business because neighbouring countries like Uganda and Tanzania enjoy more favourable tariff structures. For example, Kenyan goods face higher duties in India compared to their regional competitors.
Faced with these challenges, Chris Kiptoo reaffirmed the government’s willingness to act. He said, “As we work on the harmonisation of tax, we are also considering a one-off payment of VAT refunds alongside pending bills to ensure that industries do not close down.” He added that the problem isn’t just levees, but whether regulators are delivering value for the fees they collect.
Meanwhile, CS Kagwe pressed for technological innovation. He argued that Kenya can no longer rely on expanding land to grow; instead, it must get more from what it already has.
He advocated for the use of AI-driven farming tools to boost productivity per acre and also called for stronger ethical standards across the agricultural value chain to protect Kenya’s reputation abroad.
These proposals come at a time when Kagwe is already pushing for broader investment in agriculture. He has pledged to raise the sector’s share of the national budget from its current 3 per cent to 10 per cent, arguing that more funding is needed to drive productivity, fight post-harvest losses, and strengthen intra-African trade.
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