NAIROBI, Kenya — The government has unveiled sweeping tax and regulatory reforms aimed at reviving Kenya’s agricultural export sector, with Agriculture and Livestock Development Cabinet Secretary Mutahi Kagwe promising relief measures to improve liquidity, protect jobs and restore exporter confidence.
Speaking on the upcoming Finance Bill 2026, Kagwe said the reforms are designed to fix long-standing structural challenges that have strained exporters, including delayed VAT refunds, high regulatory levies and rising logistics costs.
“We are fixing the exporter ecosystem deliberately and permanently. The Finance Bill 2026 will ensure exporters of agricultural produce are competitive, liquid and able to reinvest in Kenya,” Kagwe said.
VAT cuts and tax relief for exporters
Under the proposed reforms, exporters of agricultural produce will benefit from a reduction of input VAT from 16 per cent to 8 per cent, alongside the removal of excise duty on packaging materials, including kraft paper.
The measures are intended to eliminate domestic taxes on export inputs and ease cash-flow pressure across the sector.
Kagwe also announced faster offsetting of VAT refunds against future tax liabilities, with special treatment for long-standing 100 per cent exporters, who will be allowed to operate in a manner similar to Export Processing Zones (EPZs) and Special Economic Zones (SEZs)—effectively removing VAT on local purchases.
AGRI EXPORTERS TO UNLOCK BILLIONS AS GOVERNMENT ENDS VAT REFUND DELAYS.The government has unveiled wide-ranging tax and regulatory reforms for agricultural exporters under the Finance Bill 2026, set to be tabled in the @NAssemblyKE in March,
Lower levies, improved air freight
In a further boost to exporters, the government plans to rationalise regulatory levies and expand air freight capacity through Kenya Airways and new international carriers, including Turkish Airlines.
The reforms are expected to unlock billions of shillings in stalled capital, accelerating reinvestment across key value chains such as horticulture, tea, coffee, fresh produce and livestock.
Flamingo Group expansion
The announcement coincided with Flamingo Group’s Sh2 billion expansion programme, which will see annual investments of Sh644 million over the next three years.
The expansion is projected to create 500 new direct jobs and boost value-added bouquet production for export to Europe and the United Kingdom.
Kagwe acknowledged the VAT refund backlog that has weighed down exporters, citing Flamingo Group’s Sh1.8 billion outstanding VAT refund, of which Sh470 million has already been paid, with further disbursements planned.
“These refunds are not losses to the government. They are reinvestment capital for farms, jobs and technology,” he said.
Government backs investors
Principal Secretary for Investment Promotion Abubakar Hassan Abubakar said the government is aligned in removing policy and regulatory 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,” he said.
