KFC objects government’s agricultural produce cess increment
Stakeholders in the cut-flower industry are now worried of the new government agricultural produce cess (GAPC), describing it as the biggest threat to recovery of Kenya’s flower sub-sector”
“Our hope to quickly recovery the country’s flower industry dis slowly diminishing. The government arbitrarily increased agricultural produces cess on all horticulture exports from 1st January 2021,” Clement Tulezi CEO Kenya flower council (KFC)says.
A letter sent on 30th December 2020 by the Horticultural Crops Directorate (HCD) to the industry directs all exporters of horticultural products to pay from 1st January 2021 Agricultural Produce Cess based on the free on board (FOB) value and not the quantity in line with the new Horticulture (Crops) Regulations.
The cut-flower industry is learning about the passing of Horticulture (Crops) Regulations, which apparently were gazetted in June 2020. These regulations have increased Agricultural Produce Cess levy from the previous 30 cents per kilo to 0.25% of the customs value. This translates to at least four times what exporters have been paying until December 2020.
Further, the letter directs exporters to make payments of CESS upfront on pre-payment accounts. Exporters are therefore advised to put an advance payment for the levies in order to avoid being inconvenienced.
Previously, payment of CESS has been done in arrears after export. The demand for pre-payment of CESS on f.o.b is costly and will be cumbersome to administer.
The Kenya Flower Council objects this arbitrary move by the government. The passing and implementation of the Horticulture (Crops) Regulations is being undertaken without proper consultation with the industry players. Additionally, exporters were given 1 day to comply.
“We would like you to note that despite our continued engagement on the Horticulture (Crops) Regulations throughout 2019, there has been no official communication by neither the Ministry of Agriculture, Agriculture and Food Authority nor the Horticultural Crops Directorate on the final outcome of the bill.
This arbitrary increase will definitely kill the industry that is still struggling to recover from the impact of COVID-19 pandemic.
By Malachi Motano
