Fresh produce exporters have moved to court to stop the implementation of a 0.25 percent levy that the Horticulture Directorate is banking on for development projects including putting up a fumigation plant.
The exporters, however argue that there is no defined method under the Regulations for the Ministry of Agriculture and Attorney-General’s office to determine the customs value and thereby raise the amount collected in levies.
Fresh produce exporters have moved to court to stop the implementation of a 0.25 percent levy that the Horticulture Directorate is banking on for development projects including putting up a fumigation plant.
The exporters, under the umbrella of Fresh Produce Consortium of Kenya, Fresh Exporters Association of Kenya and the Avocado Association of Kenya, have sued the Ministry of Agriculture, the Attorney- General and the Horticultural Directorate over what they term a rushed implementation of the levy.
The exporters, however argue that there is no defined method under the Regulations for the Ministry of Agriculture and Attorney-General’s office to determine the customs value and thereby raise the amount collected in levies.
“The taxable value is amorphous, ambiguous and arbitrarily imposed on the petitioners’ members for compliance, thus presenting an administrative difficulty and leaving the application of the levy open to manipulation and abuse,” said the exporters in a court filing.
They say that the 0.25 percent levy is four times the Sh0.30 that the directorate used to charge before.
They estimate the new levy will increase their taxes from the current annual average of Sh90 million to Sh377 million, projecting that over 40 percent of horticulture export firms will be pushed out of business.
The new levy, which became effective at the beginning of the year, is backed by the Crops Act and will be based on the value of the consignment being shipped.
The directorate said part of the levy will be used to set up fumigation and hot water plants to clean mangoes as the country prepares to resume shipments to the US, Europe and other key markets.
Kenya has not been exporting mangoes to these key destinations in the last seven years due to presence of fruit flies on the fruit.
The funds, said the directorate, will also be used for research to contain some of the pests that pose a threat to Kenya’s export market.
The agency argues that funding shortfall had limited Kenya’s response to the quarantine pests leading to stricter requirements by the export markets.
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