19 Jan

The Ministry of Agriculture says it will table to the Cabinet a request by tea traders to have the 16 percent value-added tax on packaging material and 35 percent duty on imported papers to be scrapped to allow them to sell the beverage to new markets other than the traditional ones currently facing economic woes. Agriculture Cabinet Secretary Mithika Linturi says he will highlight the opportunities that the country is missing out on for not adding value to the tea that is produced locally. Most of the Kenyan tea is exported in bulk with traders shying away from adding value because of the expensive nature of the exercise that makes the commodity uncompetitive in the world market. For instance, the government charges a 16 percent duty on all the tea that is value-added locally with a tax of 35 percent on the imported paper used for packaging. “We need to address the issue of 16 percent duty and all other taxes, I will make a presentation to the cabinet for the government to make a decision on the matter and see how best it can be dealt with,” said Mr Linturi.  Traders say with economic woes facing the top buyer, they now need to do value addition for markets that require ready tea. “There is a huge market for value-added teas out there and we have countries like South Africa and the US that require teas that are ready for shelf and not bulk as we export most of it,” said Peter Kimanga, a tea trader with Global Tea Commodities. Mr Kimanga said with the 16 percent VAT and duty on imported paper, traders cannot do value addition and sell these teas competitively in the world market. The scrapping of duty on teas has been an issue of contention between the government and traders for over a decade now. Kenya’s top buyers are currently undergoing one of the toughest economic times and they have significantly cut the volumes of tea that they purchase from the auction. The volume of tea exported to Pakistan, Kenya’s top buyer of the commodity, fell 18 percent in eight months in August 2022 to 121 million kilogrammes. 

Source: Business Daily