‘ZAKAYO’ introduces another tax to farmers selling their produce to cooperatives as Kenyans continue crying – Look!

 

Saturday December 30, 2023 – President William Ruto’s government, through the National Treasury, has revealed that it will be seeking to tax agricultural products sold by farmers through various cooperatives. 

In the Draft 2024 Budget Policy Statement prepared by the Treasury, it was revealed that this move would help the government raise revenue to fund and sustain the bottom-up economic transformation agenda.

The agricultural sector was labelled as Hard to Tax Sector with the Treasury promising to develop a framework to raise revenue from the area. 

“(The Treasury will) review and explore means on suitable taxation of the agriculture sector, such as introducing withholding tax on payments for produce delivered to cooperatives or other organized groups,” the Policy Statement indicated how farmers would be affected in the 2024/2025 Financial Year Budget. 

According to the Kenya Revenue Authority, withholding tax is a method of tax collection whereby a payer of certain incomes deducts tax upon payments of certain incomes to payees.

The payer then remits the tax so deducted to the Commissioner of Domestic Taxes Department within 5 working days after the deduction is made.

The Njuguna Ndung’u-led ministry assured Kenyans that a threshold would be put in place to cushion low-income earners. 

Other hard-to-tax sectors include informal and digital sectors.

To ensure that the Kenya Kwanza administration raised revenue from those sectors, the policy statement has proposed a review and exploration of means of suitable taxation of the informal sector as well as the digital sector.