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Farmers and exporters to save billions in landmark tax shift
The Kenya Revenue Authority should ease the importation of goods.
Agricultural exporters are set to unlock billions of shillings invested in capital after the government announced far-reaching reforms aimed at ending long-standing VAT refund delays and easing the cost of doing business in the export sector.
Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe said the interventions, anchored in the Finance Bill 2026, are designed to restore exporter confidence, protect jobs and accelerate reinvestment across key agricultural value chains.
CS Kagwe, this week, said that the reforms will permanently fix structural bottlenecks that have constrained exporters for years, particularly cash-flow pressures caused by delayed VAT refunds, high levies and escalating logistics costs.
“We are fixing the exporter ecosystem deliberately and permanently. The Finance Bill 2026 will ensure that exporters of agricultural produce are competitive, liquid and able to reinvest in Kenya,” he said.
Under the proposed changes, exporters will benefit from targeted tax and regulatory relief, including a reduction of input VAT from 16 per cent to 8 per cent, removal of excise duty on packaging materials such as kraft papers, and scrapping of export promotion levies.
The reforms also propose faster offsetting of VAT refunds against future tax liabilities, special tax treatment for long-standing 100 per cent exporters to operate in a manner similar to Export Processing Zones (EPZs) and Special Economic Zones (SEZs), and rationalisation of regulatory levies.
To address logistical constraints, the government plans to expand air freight capacity through Kenya Airways and additional international carriers, including Turkish Airlines.
According to Mr Kagwe, the measures are expected to unlock billions of shillings currently tied up in refund backlogs and stimulate reinvestment in horticulture, tea, coffee, fresh produce and livestock value chains.
He said a stronger export sector would have a multiplier effect across the economy, creating jobs, strengthening rural livelihoods and increasing agriculture’s contribution to gross domestic product.
When exporters reinvest in Kenya, communities grow, jobs multiply and the economy strengthens, noted the agriculture docket boss, adding “that is the Kenya we are committed to building.”
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