Agricultural Pest Control Products
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Farmers
FILE
GDP.Osho Chemicals
Gishu County
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Kaplegebet
Kenya
Manoj Shah
Shah
Treasury
Turbo Constituency
Uasin
VAT
workers

Farmers set to pay more for pesticides after VAT changes

In a statement, the manufacturers said the shift of agricultural pest control products from zero-rated to exempt status in the recent changes to the VAT Act will translate to higher prices for customers, with the due date being July 1. Exemption from VAT means that manufacturers cannot recoup input VAT, and therefore they are forced to factor it in the final price charged to the customer.Agriculture in Kenya employs nearly 40 per cent of the total labour force, and contributes about 35 per cent of the country’s GDP.

Farmers set to pay more for pesticides after VAT changes

Workers spray a maize crop against fall armyworm at Kaplegebet village in Turbo Constituency, Uasin Gishu County on June 19, 2018. FILE PHOTO | NMG

Farmers are set to pay more for pesticides as manufacturers move to implement the VAT on agricultural pest control products following the removal of a tax exemption. In a statement, the manufacturers said the shift of agricultural pest control products from zero-rated to exempt status in the recent changes to the VAT Act will translate to higher prices for customers, with the due date being July 1.Exemption from VAT means that manufacturers cannot recoup input VAT, and therefore they are forced to factor it in the final price charged to the customer.“We have no choice but to implement the new tax backdated to July 1, 2018. This could reduce use of chemicals in control of pests causing a drastic drop in food production,” said the statement in part.

“The 16 per cent VAT on Agricultural Pest Control Products backdated to July 1, 2018 is a big surprise to us since we engaged parliamentary committees of finance and agriculture. We also closely engaged the Treasury but it was all in vain.”Maize farmers who have been battling the army worm attack are likely to be big losers in the new tax order, having already chalked up huge expenses in purchasing additional pesticide to fight the worm.Agriculture in Kenya employs nearly 40 per cent of the total labour force, and contributes about 35 per cent of the country’s GDP.Osho Chemicals Chairman Manoj Shah said the changes in the way pesticides are taxed will also hurt efforts to grow local manufacturing. He said local agro-chemical manufacturers risk losing their market to imported products that are highly subsidised in their countries, thereby enabling them sell cheaply in the local market.“Kenya among the few countries taxing a sector which in most parts of the world is generally subsidised,” said Mr Shah.ALSO READ: KHAEMBA: Is VAT exemption remedy for refund of huge claims?

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