The Kenyan government owes flower farmers more than Sh10 billion in unpaid value-added tax refunds, and Agriculture Cabinet Secretary Mutahi Kagwe says the levies still being charged on top of that debt are unfair. Kagwe told growers at the Naivasha Horticultural Fair this week that horticultural producers are being taxed as if they were factories, and he’s pushing Treasury and the Ministry of Trade to change that before the sector loses more ground to rising freight and fuel costs.
How Much Does the Government Owe Flower Farmers?
Figures vary depending on who is counting. The Kenya Flower Council has put the government’s outstanding VAT refund bill to the flower sector at more than Sh12 billion. The Ministry of Trade, speaking at the International Flower Trade Exhibition (IFTEX) in June 2026, put the backlog at more than Sh10 billion “accumulated over the years.” Either way, growers say the unpaid refunds are large enough to affect hiring, expansion and day-to-day cash flow on farms that often carry thousands of workers on payroll.
Naivasha Horticultural Fair chairman Richard McGonnel said some individual farms are owed tens of millions of shillings each, on operations with workforces as large as 14,000 people. He also flagged smaller, recurring charges — including fees from the Kenya Bureau of Standards — that he called “petty taxes” with no clear justification.
Quick facts: Kenya’s flower-tax dispute
| Figure | Detail |
|---|---|
| VAT refunds owed to flower farmers | Sh10 billion+ (government, June 2026) to Sh12 billion+ (Kenya Flower Council) |
| Proposed VAT cut on horticulture inputs | From 16% to 8% (fertilisers, chemicals, machinery) |
| 2025 cut-flower export earnings | Sh81.3 billion, up from Sh72.1 billion in 2024 |
| Sector employment | 200,000+ direct jobs; more than half held by women |
| Export destinations (2025) | 143 countries, led by the Netherlands via the Aalsmeer Flower Auction |
Why Are Flower Farmers Calling Kenya’s Taxes ‘Punitive’?
Kagwe’s central objection is about classification, not just cost. Horticultural growers, he argues, are being levied as though they run industrial operations rather than farms.
“If you say a horticultural grower is an industry, a manufacturing concern, you charge them as such — that’s unfair because they are not an industry,” Kagwe told the Naivasha gathering. “They are agricultural product producers. So we are debating all these things. We are liaising with my colleague in Trade to make sure the sector is treated fairly, and you know you cannot get growth out of taxation; you get growth out of production.”
That framing matters because it isn’t only about the VAT refund backlog. Growers say they’re also absorbing a string of smaller levies — including KEBS charges — that were designed with manufacturers in mind and don’t reflect how a flower farm actually operates.
What’s Driving Up Costs Beyond Taxes?
Taxes are only part of the squeeze. Freight and fuel costs have more than doubled for exporters moving perishable flowers to European and Middle Eastern markets, and growers say the ongoing US-Iran conflict has pushed fuel prices higher still, tightening an already strained logistics chain for fresh produce.
Elgon Kenya managing director Bimal Kantaria used the same Naivasha platform to press Kenya Airways to open a dedicated freight division for fresh produce, separate from its passenger operations. “We really want Kenya Airways, which is our national carrier, to open a freight division so that they do only freight transportation of our fresh produce,” he said, adding that expanded open-skies agreements to bring in more cargo capacity would help if a dedicated KQ freight arm isn’t feasible soon.
What Is the Government Proposing to Fix It?
Two changes are already on the table. Trade Cabinet Secretary Lee Kinyanjui announced in June 2026 that the government plans to cut VAT on horticulture inputs — fertilisers, chemicals and machinery — from 16 percent to 8 percent, though industry players have pushed for the inputs to be zero-rated outright rather than merely reduced. Separately, the Finance Bill 2026 includes provisions industry groups say are intended to unlock some of the stalled VAT refunds owed to farmers and exporters more broadly.
Kinyanjui acknowledged the sector’s complaints as “legitimate” and said the ministry would keep engaging on refund efficiency, compliance costs and market access. Kagwe’s more recent remarks in Naivasha suggest that engagement hasn’t yet translated into relief growers can bank on — the review he described is still at the debate stage, with no firm timeline given for when reclassification or faster refunds might actually take effect.
Frequently Asked Questions
How much does Kenya’s government owe flower farmers in VAT refunds?
Estimates range from just over Sh10 billion, per government figures cited in June 2026, to more than Sh12 billion according to the Kenya Flower Council. The gap reflects different counting periods and methodologies, but both figures describe a multi-year backlog.
Why do flower farmers pay VAT they later have to claim back?
Cut flowers are largely zero-rated exports, but farmers still pay VAT upfront on inputs like fertiliser, packaging and electricity. They’re entitled to reclaim that VAT from the Kenya Revenue Authority, but delays in processing refunds tie up cash that growers say they need for wages, inputs and expansion.
Is the government actually cutting flower industry taxes?
A cut to VAT on horticulture inputs, from 16 percent to 8 percent, has been proposed by the Ministry of Trade, and the Finance Bill 2026 contains provisions aimed at unlocking stalled refunds. Neither has fully resolved the backlog yet, and CS Kagwe’s September remarks show the broader tax classification question is still under discussion.
How big is Kenya’s flower export industry?
Kenya is Africa’s largest flower exporter and one of the world’s top rose exporters, shipping to 143 countries in 2025. Cut flowers alone earned Sh81.3 billion in export revenue that year and the wider horticulture sector employs more than 200,000 people directly, over half of them women.
What is Naivasha’s role in Kenya’s flower industry?
Lake Naivasha and its surrounding farms make up the heart of Kenya’s rose-growing region, thanks to the area’s altitude, climate and water access. The annual Naivasha Horticultural Fair has become a key venue where growers, exporters and government officials air sector-wide grievances like this one.
For more on the pressures facing Kenyan agriculture this year, see 254.ke’s earlier coverage of Kenya’s push for horticulture export growth in Italy, the Sh12.4 billion government boost for 625,000 farmers, and how Western Kenya cane farmers responded to the renewed sugar import ban.
For official trade and tax policy updates, see the Kenya Ministry of Investments, Trade and Industry.
By the 254.ke Newsroom
