Kenya mulls scrapping some tea taxes to make industry profitable

Kenya, the world’s biggest exporter of black tea, is considering removing some levies charged on its tea producers and traders to make the industry more competitive, the nation’s agriculture ministry said.

The East African nation charges more than 35 taxes and duties at different stages of production and marketing, including a 16 percent value added tax and a 1 percent tariff, whose proceeds are used to fund the industry regulator.

“We are willing to do any preventive measure to make sure tea producers are doing well,” Ministry of Agriculture, Livestock and Fisheries Cabinet Secretary Willy Bett told reporters in Nairobi, the capital. “We are looking at the report presented by the task force and even going beyond their recommendations.”

Kenya produced 399.2 million kilograms of tea in 2015 and earned 125.2 billion shillings ($1.24 billion) from exports to destinations such as Pakistan, Egypt and the U.K.

Large-scale producers are finding it more difficult to remain competitive because of expensive electricity and multiple taxation, the chief executive of the Kenya Tea Growers Association, Apollo Kiarie, said Monday.

“We either break even or change to a different crop,” he said.