Flower firms shifting base to Ethiopia over taxes

Money Markets

Roses in a greenhouse. Industry players say punitive taxes are making the horticulture industry uncompetitive in the global market. PHOTO | FILE |  NATION MEDIA GROUP

By GERALD ANDAE

In Summary

• Flower farms pay agricultural produce cess and have to get single business permits from the counties. All flower farms are required to remit taxes to the Ministry of Irrigation, the Water Resource Management Authority (Warma) and the National Environment Management Authority (Nema).

Four Kenya-based flower firms have shifted to Ethiopia as a result of punitive taxes that are making the horticulture industry uncompetitive in the global market, industry players have said.

Data from the Kenya National Bureau of Statistics (KNBS) indicates that earnings in the flower sector dropped by three per cent to Sh40 billion in the first eight months of the year compared to Sh41.5 billion the same period in 2014.

Jane Ngigi, the chief executive of the Kenya Flower Council, says multiple taxation by the governments is negatively affecting the sector and is likely to pose an existential threat in the coming years if not reviewed.

Ms Ngigi noted that flower farmers are paying taxes to the national and county governments as well as to other government agencies.

“About four flower firms have shifted to other regional countries in the last few years because of the harsh tax regime and lack of incentives in the country,” said Ms Ngigi while declining to give the names of the firms.

Besides the four, she claimed one other flower farm has shifted operations to neighbouring Uganda.

Flower farms pay agricultural produce cess and have to get single business permits from the counties. All flower farms are required to remit taxes to the Ministry of Irrigation, the Water Resource Management Authority (Warma) and the National Environment Management Authority (Nema).

“Paying taxes to the ministry of environment as well as to Warma and Nema, which are the agencies of the national government, is an act of double taxation that does not augur well with investors,” she said.

The CEO added that counties have also introduced branding taxes where branded vehicles have to remit levies to any county they pass through at different rates.

The lobby has been holding discussions with the two levels of government over the matter.

“We are making some headway but it is taking long to reach a decision,” Ms Ngigi told the Business Daily Thursday.

The horticulture industry is a major forex earner contributing about three per cent to Kenya’s GDP.