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European Union says no to Kenya’s plea for export tax refund


European Union says no to Kenya’s plea for export tax refund

European Union says no to Kenya’s plea for export tax refund
Workers at Oserian Flower plant packing flowers for export. Photo credit: The Star

The European Union has reiterated it will not issue tax refunds to Kenyan fresh produce exporters during the four months period ahead of the formalisation of the new Economic Partnership Agreement.

The exporters are currently operating under the General System of Preferences.

This has raised concern among flower exporters who say they might incur loses next year on export taxes for Valentine’s Day shipments which will start in December.

EU Trade Commissioner Karel De Gucht who met was in Nairobi last week told exporters to forget recovering their duty payments for October to January since the trading block does not provide for export tax refunds.

“EPAs has enormous potential which will be achieved if we ratify and conclude it as soon as possible. However, we cannot provide export tax refunds for the period Kenyan exporters will be paying duty as our laws do not provide for that,” he said.

Kenya Flower Council chief executive Jane Ngige on the other hand said the Valentines period accounts for 60 per cent of flower firms annual revenues.

“We are concerned because flower shipments to the EU are attracting huge taxes since the EPAs elapsed in October 1. We have already lost Sh100 million to export taxes for last month,” the Kenya Flower Council chief executive officer Jane Ngige said.

The previous EPA which allowed goods from East Africa duty free access to the EU market ended on October 1, committing Kenya to pay customs duties of between four to 24 per cent on its produce because of its lower middle income country status.

Tanzania, Uganda, Burundi and Rwanda still have full duty free quota access to the EU market owing to their least developed countries status.

The Kenya Association of Manufacturers chief executive officer, Betty Maina urged the commissioner to lobby the EU to sign the deal before end of January saying exporters are expecting to lose Sh670 million each month which has made it difficult to move goods to the EU.

“I understand your problems and wish to solve them as soon as possible. I expect Kenya to regain duty free and quota free treatment by January at the earliest,” Gucht said.

Foreign Affairs and International Trade Cabinet secretary Amina Mohamed said the joint EAC-EU negotiation meeting held in Brussels last month concluded on all outstanding issues. “The concluded agreement will provide legal certainty for businesses and open a long term perspective for free and unlimited access to the European market for EAC countries. They will now be able to focus on improving their economic performance without worrying about the potential loss of full duty free quota free access to the EU due their improving status,” she said.


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