Home Business Govt mulls scrapping VAT on tea sold in factories 

Govt mulls scrapping VAT on tea sold in factories 


The agriculture ministry through the Tea Board of Kenya has developed a concept note that will attract value addition to tea stakeholders across the global market.

Agriculture and Livestock Development Cabinet Secretary Mithika Linturi has said the concept note which has received approval from the National Treasury will offer tax tariffs on tea purchased from factories or tea auction centers by removing Value Added Tax (VAT) in order improve cash flows for tea exporters involved in value addition.

“The scheme aims to unlock the potential of Kenya’s tea by providing both tax and other incentives necessary to make Value addition more attractive,’’ said Linturi.

He also said smallholder tea factories will need to diversify their production into specialty teas which is currently not saturated like the CTC market since Orthodox teas have higher earnings at an auction therefore increasing the tea farmers earnings.

“The scheme will also entail promotion of a Kenya tea brand and enhancement of orthodox tea manufacturing for smallholder tea factories. I urge the Kenya Tea Development Agency ( KTDA )managed tea factories to leverage on the incentives to upscale their manufacture of orthodox teas and value addition at factory level instead of continuing to do bulk tea sales,” he stated.

Linturi added that they will support KTDA managed factories with promotional activities and grant them the license to manufacture these specialty teas

KTDA Holdings Limited Chairperson Enos Njeru, said the organization is diversifying its operations to achieve cost effectiveness whilst enhancing returns for the smallholder tea farmers.

“The global industry landscape is evolving and as such we must embrace technology and integrate it with our operations to achieve cost effectiveness. We are investing in state-of-the-art equipment that will not only diversify our operations and increase our returns but also save through energy efficiency and reduced maintenance costs,” he said.

Sally Namuye
+ posts