The Kenyan government has proposed a package of tax and regulatory measures aimed at reducing costs and addressing cash flow constraints for fresh produce exporters. The proposals are contained in the Finance Bill 2026, which is expected to be tabled in Parliament in March.
Under the bill, the government plans to reduce the input value-added tax for exporters from 16 per cent to 8 per cent. In addition, excise duty and export promotion levies on packaging materials would be removed. Exporters would also be allowed faster VAT refunds through an offsetting mechanism. Long-standing exporters selling all their output abroad would receive preferential tax treatment similar to Export Processing Zones and Special Economic Zones, exempting VAT on local purchases.
The reforms also include measures to expand air freight capacity through Kenya Airways and additional international carriers, targeting improved logistics for perishable exports.
Agriculture and Livestock Development Cabinet Secretary Sen. Mutahi Kagwe said the proposals aim to address liquidity challenges linked to VAT refund delays and statutory charges. "For years, delayed VAT refunds and high levies have constrained cash flows for our exporters, limiting reinvestment and growth. These reforms are meant to ease that pressure, unlock stalled capital, and ensure exporters can compete effectively in global markets," Kagwe said.
Speaking during the launch of Flamingo Group Investments' expansion project in Naivasha, Kagwe confirmed that KSh 470 million had been paid toward the company's KSh 1.8 billion VAT refund backlog, with further payments planned. "We are demonstrating that this is not just policy on paper. We have already released KSh 470 million to Flamingo, and we will continue clearing verified claims so that exporters can plan with certainty," he said.
According to Kagwe, the proposed changes could release funds tied up in refund backlogs across horticulture, tea, coffee, and livestock supply chains. "When exporters get their refunds on time, that money goes straight back into farms, factories, jobs, and new markets. This is how we strengthen horticulture, tea, coffee, and livestock, and cement Kenya's position as Africa's horticultural powerhouse," he said.
During the same event, the Kenya Plant Health Inspectorate Service highlighted phytosanitary compliance levels within the floriculture sector. "Kenya's floriculture industry has built a strong reputation for quality and compliance, exporting over 60 million flower stems daily, with only five interceptions recorded since May 2025," KEPHIS said.
KEPHIS confirmed that Flamingo Group Investment began expanding its Naivasha operations on January 21, 2026, following the release of part of its VAT refund. The expansion is expected to add 500 jobs and increase value-added flower exports to Europe and the UK, illustrating how fiscal and logistics measures could influence fresh produce supply chains if enacted.
Source 1: Capital Business
Source 2: Farmers Review Africa
