Cut flower exporters are likely to get refunds up to Sh300 million for tax incurred within the European Union between October 1 and December 24 when the duty-free regime had lapsed.

Kenya Flower Council chairman Richard Fox said the lobby group is hopeful that the government will refund the money.

“We are discussing with the government over this [tax refunds] and we hope there will be a positive outcome,” he said yesterday in Naivasha.

Cut flowers exports attracted duty of between five per cent and 8.5 per cent during the three months, which KFC estimated at Sh100 million monthly.

Exporters shouldered the tax burden due to lack of a deal between the East African Community and EU to renew the Economic Partnership Agreement.

EU ambassador to Kenya Lodewijk Briët said it is impossible for the trade bloc to refund the taxes to Kenyan fresh produce exporters because this was EAC’s fault in delaying the EPA renewal.

“It wouldn’t be quite right if we are blamed for taxes that Kenya has incurred. The tax was reinstated because the EAC delayed to ratify the EPAs,” he said.

As a result, the EU classified Kenya among countries under the General System of Preference which are considered middle income economies.

The EU remains the largest market for Kenya, consuming an estimated 80 per cent of its fresh agricultural produce exports. Kenya accounted for 30 per cent of EU’s imports of roses in 2014, made up, according to Briët.

EU said the EAC must improve competitiveness against low-cost producers such as Ecuador and Colombia, which are clawing EU market shares even without preferences.

“The private sector needs to adjust and adopt new approaches to foster competitiveness and the EAC governments have to implement sound policies,” Briët said.

He said the country has since earned back its duty-free, quota-free access to the EU, eliminating uncertainty among exporters.

“However, Kenya might be reverted back to the GSP in September 2016, if the EAC fails to sign the agreement in June,” he said.