Small holder tea farmers to lose over 700m to new tax

A tea farmer affiliated to Gatunguru Tea Factory in Kangema, Muran'ga, on her farm (PHOTO: Kibata Kihu)

The Kenya Tea Development Agency (KTDA) says smallholder tea farmers affiliated to its managed factories will lose over Sh754 million annually, after the new minimum tax came into effect on January 1, 2021.

The tea agency said the amount is higher by Sh20 million the dividend that KTDA Holdings Ltd recently declared to its shareholders from the 54 factory companies.

The tax, it noted, will eat into smallholder tea farmers’ income and reduce their take-home package earned from their green leaf sales. The agency estimates KTDA-managed tea factories will be paying over Sh62.8 million each month.

KTDA-managed factories recorded a Sh9.02 billion turnover for the year ending June 30, 2020 and would need to remit over Sh799 million with the new tax regime.

Mr Ngere Tea Factory in Murang’a would remit the highest amount Sh21.8 million annually, while Litein Tea Factory in Kericho would pay the second-highest remittance at Sh19.6 million.

KTDA Management Services Managing Director Alfred Njagi urged the State to exempt smallholder tea farmers from this tax “The new tax will erode farmers’ earnings and could therefore prove to be counterproductive to the cause," he said.