The Agrochemical Association of Kenya (AAK) believes that the proposed 2012 Value Added Tax (VAT) bill may pose a major threat to the agriculture industry. In a fresh outcry for clemency, the Association noted that farmers, agrochemical manufactures, retailers and consumers may have to pay more for their chemical supplies if the bill is passed.

“The agrochemical industry will see losses as high as KES 1 billion due to the taxes,” said the Association’s Chairman, Kuria Gatonye yesterday. He noted that the move could adversely affect the country’s economy.

If the bill is passed, it will force players in the industry to pay a VAT of 16% up from the current zero-rated system. According to Mr Gatonye, the projected losses account for 12.5% of the industry’s KES 8 billion revenue.

He said that the VAT would put more pressure on the agricultural sector’s cost of production. If the government approves the bill, the tax will drive up the price of produce such as maize, rice, beans and wheat.