NAIROBI, Kenya, Nov 19 – Kenya’s agricultural sector is pushing for a 10-year predictable tax framework, warning that inconsistent fiscal policies are eroding competitiveness and discouraging long-term investment across major value chains.
The proposal dominated a sector forum convened by Agriculture Cabinet Secretary Mutahi Kagwe, where industry players jointly presented a memorandum to National Treasury PS Chris Kiptoo and Council of Governors Chair Ahmed Abdullahi.
Stakeholders said fluctuating VAT rules, delayed refunds and uneven regulatory levies have distorted production costs and disrupted cashflow for both farmers and processors. They want VAT on key inputs and agricultural produce harmonised and maintained over a decade to support predictable planning.
They noted that pending VAT refunds — now above Sh150 billion — have pushed several firms to scale down operations or shut down. The sector is proposing a one-off settlement through a special bond to ease pressure on agribusinesses.
High taxes on essential packaging materials, including Kraft paper, were cited as another cost driver that diminishes the competitiveness of Kenyan goods in export markets. Some duties total up to 60 percent, prompting calls for exemptions for agricultural packaging to lower domestic prices and restore regional competitiveness.
Farmers also expressed concern over the rollout of E-TIMS, warning that aggressive enforcement could push more produce into informal supply chains and disrupt market visibility.
The forum also flagged disparities in export tariff structures, with players saying Kenya is losing markets to Uganda and Tanzania whose products face lower duties in markets such as India.
“As we work on the harmonization of tax, we are also considering a one-off payment of VAT refunds alongside pending bills to ensure that industries do not close down,” Kiptoo said. “The issue here is not so much about the levies but the services that regulators deliver for the levies they charge.”
Abdullahi acknowledged weaknesses in county-level enforcement, including illegal cross-county cess and proposed land rates. “Cess should not be collected outside the county of origin as it impacts commodity prices in other counties,” he said.
CS Kagwe urged sector players to adopt technology, including AI-driven tools, to improve productivity despite limited land resources. He also called for stronger ethical standards across the value chain to safeguard Kenya’s export reputation.
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