CS Kagwe announces plan to introduce major tax reliefs for agri-exporters

According to CS Kagwe, the new measures are designed to unlock reinvestment, protect jobs and restore exporter confidence after years of cash-flow pressure caused by delayed VAT refunds, high levies and rising logistics costs.

“We are fixing the exporter ecosystem deliberately and permanently. The Finance Bill 2026 will ensure that exporters of agricultural produce are competitive, liquid and able to reinvest in Kenya,” Kagwe said during the official launch of the Flamingo Group Investments (FGI) Expansion Project in Naivasha.

CS Kagwe revealed that the Finance Bill 2026 will introduce targeted tax and regulatory relief for exporters of agricultural produce.

Some of the reviews include the reduction of input VAT from 16% to 8% for exporters, removal of excise duty on packaging materials, including kraft paper, the removal of export promotion levies and the removal of excise duty and export promotion levies on packaging materials, including kraft paper.

Others include faster offsetting of VAT refunds against future tax liabilities, special treatment for long-standing 100% exporters to operate like EPZs and SEZs, rationalisation of regulatory levies, and expanded air freight capacity through Kenya Airways and new international carriers.

The reforms are expected to unlock billions of shillings in stalled exporter capital and accelerate reinvestment in horticulture, tea, coffee, fresh produce and livestock value chains.

The announcement coincided with Flamingo Group’s launch of a Ksh.2 billion expansion programme, involving annual investments of Ksh.644 million for the next three years, the creation of 500 new direct jobs, and expanded value-added bouquet production for export to Europe and the UK.

Kagwe acknowledged the long-standing VAT refund backlog that has affected exporters, citing Flamingo’s Ksh.1.8 billion outstanding refund balance. He confirmed that Ksh.470 million has already been disbursed, with further payments scheduled.

“These refunds are not losses to government. They are reinvestment capital for farms, jobs and technology,” he said.

The reforms were reinforced by Principal Secretary for Investment Promotion, Mr. Abubakar Hassan Abubakar, who said the government is fully aligned in removing bottlenecks that undermine investor confidence.

“Kenya’s competitiveness depends on how fast we convert policy into action. Exporters are central to our growth story, and we will support them,” Abubakar said.

The event drew senior government officials, regulators, industry leaders and diplomats, including the Acting British High Commissioner, His Majesty’s Trade Commissioner, Invest Kenya leadership, KEPHIS, KEPROBA, and exporter associations.