Ketepa hopes for tax break on VAT

May 10, 2011
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, NAIROBI, Kenya, May 10 – The Kenya Tea Packers (Ketepa) limited is pushing for the waiver of Value Added Tax on tea products, arguing that it should be treated like a food item.

Ketepa Managing Director Timothy Chege however said on Tuesday that it was unlikely for the government to heed their calls in this year\’s budget speech mid next month.

"Tea is seen as a commercial product by the government so they will still tax it. I think tea is a food item like rice or sugar so it should not be charged value added tax," said Mr Chege.

With 95 percent of Kenyan tea exported in bulk, only five percent of the produce is consumed locally in its pure form and Mr Chege said this could be a reason why the government does not grant the industry a tax break.

After water, tea is the world\’s most consumed beverage, with Kenyan tea commonly combined with some of the world\’s best tasting blends.

Mr Chege said this should encourage the export of more Kenyan tea as a value added product to help boost profits for the tea industry and create more of a market for local farmers.

"We already export value added tea to Sudan, Saudi Arabia, Dubai, and Egypt. We should start selling at least 50 percent of Kenyan tea as value added," said Mr Chege.

He also said Ketepa has been hit by the high fuel costs in the areas of distribution and production.

"Some of our packing like the plastic bottles and labels are oil based, so we\’ve seen a 15 to 20 percent increase in production as a result.  Costs have gone up over 10 percent for our distribution vehicles," he added.

The Ketepa boss spoke during the award of a vehicle to one of the winners for its promotion \’Vroomisha na Ketepa.\’

Mr Chege said such initiatives are part of the company\’s way of mitigating high fuel costs by turning challenges into opportunities for generating revenue.

"We are trying to be innovative and find ways of selling more, selling better and sourcing better, by rewarding consumers, developing high end and low end products and keeping prices affordable."

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