Kenya: ministry wants VAT on tea and coffee scrapped

The Agriculture ministry wants the National Treasury to remove value-added tax (VAT) on tea and coffee to create more jobs along the two value chains. It says this will attract more firms to package and add value to produce locally. High taxes on locally-packaged tea and coffee have pushed producers to export the commodities that are then added value and packaged in other countries before re-exporting to different regions, including Kenya. In many instances, locally-packaged products are unable to compete with the imports on price. Agriculture Cabinet Secretary Peter Munya said the ministry had prepared a memo that will be presented to the Cabinet in the course of this month proposing removal of VAT on tea and coffee packaged and sold locally. “We will be proposing a review of the VAT Act to make sure that tea and coffee are zero-rated. All other food crops do not pay VAT but it is there on tea and coffee and this tends to reduce earnings for farmers,” he said. Shied away ...