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FKE call for settlement of delayed Sh12billion VAT tax rebates owed to traders

FKE said the delayed VAT refunds continue to strain the agricultural sector, disrupting the sector's operations, hindering growth, and reducing employment opportunities – all that ultimately affect the economic progress.

The Federation of Kenya Employers (FKE) has called on the government through the Kenya Revenue Authority (KRA) to offset Ksh12 billion Value Added Tax (VAT) refund that have been pending for farmers to reduce financial pressures and enhance sector sustainability.

FKE said the delayed VAT refunds continue to strain the agricultural sector, disrupting the sector’s operations, hindering growth, and reducing employment opportunities – all that ultimately affect the economic progress.

The employers’ umbrella body has appealed for the government to develop supportive policies that would ensure the preservation of the opportunities for employment and the livelihoods.

FKE has observed that the tea and flowers sub-sector in Kenya provides decent work and decent wages to a substantial number of waged employees.

However, it has also noted that the rising cost of airfreight, stringent global market demands, delay of refunding value added tax (VAT) were causing turbulence in the agricultural sectors.

The employers have said the increase in cargo charges from US$ 2.5 (Ksh323.75) to US$ 3.5 (Ksh453.25) per kilogram – which is a 40 per cent rise in the cost of airfreight, has affected the competitiveness of Kenyan fresh produce exporters.

Since 2021, the cargo charges have been increasing at the rate of US$1.6 per kilogram.

This implies that the Kenyan flower exporters now face stiff competition from Ethiopia, Colombia, and Ecuador, which enjoy lower freight costs and favorable trade terms.

The employers, therefore, recommend that Kenya Airways reduce the cargo rates for tea and flower exporters and expand the freight capacity during peak seasons to support exporters.

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Following the new European Union (EU) regulations, there has been an increase in inspection levels from five to 25 per cent, causing delays at the EU entry points.

FKE now urges the government to negotiate for favourable terms through the Economic Partnership Agreement (EPA) and diversify export markets. On tea sectors, FKE said there is a need for the government to observe the rule of law, and stop illegal activities such as those threatening the tea operations in Nandi and Kericho.

“We urge the government to ensure that the regulatory environment is preserved in these critical sectors. Disruptions in these sectors stand to worsen the unemployment situation in the country,” FKE said in a statement.

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