Kenya: County Governments collecting Cess tax on agricultural produce

The County Governments have mounted barriers to collect taxes and Cess on agricultural produce. In Nakuru County they intend to impose Cess on floriculture at a rate of 1% of turnover whereas in Meru County they started collecting at a rate of Kshs 25 per box beginning October 2013.

The demand for produce Cess at county level is tantamount to double taxation which is illegal. According to the constitution Article 209(1) (c) ‘Only the National Government may impose customs duties and other duties on import and export goods.

The Agriculture Act (Cap.318) gave local authorities power to impose cess on any kind of agricultural produce with the consent of the minister. The Agriculture Act was repealed on January 25, 2013 by the Agriculture, Fisheries and Food Authority Act (No.13 of 2013) However, its implementation has been put on hold pending further deliberations. The flower industry is currently working on a common industry position to deal with the issue.

To begin with, there is need for stakeholders who includes the county governors to deliberate on regulatory requirements for sustainability of exports under the devolved government environment. Further, discuss how the central government will structure its mandate for capacity building for counties and address how the central government will engage stakeholders in its second mandate of setting policies.

Source: Kenya Flower Council