Government Should Stop Anesthetizing Floriculture Investors

By Ernest Muriu and Floriculture Staff

Export Processing Zone (EPZ) program was established in 1990 to provide an attractive investment opportunity for export-oriented business ventures within designated areas or zones. This sought to help the economy through increased productive capital investment, jobs generated, technology transferred, backward linkages developed and diversified exports.

However, to date no one has ever answered, why is flower growing not included in the program. The sector which is predominantly an export oriented business continues to struggle with a stringent tax regime which has slowed foreign direct investment for the last five years and a relocation of a number of investors to the more lucrative Ethiopia. All this has happened under the government’s watch.


The EPZ Act in section 15(1) provides that The Minister may, on recommendation of the Authority and in consultation with the Minister for the time being responsible for finance, with the object of attracting, promoting or increasing the manufacture of goods, or provision of services, for export, by notice in the Gazette, declare any area of Kenya to be an export processing zone. Where “manufacture under the EPZ Act includes—

(a) The conversion or organic or inorganic material by manual, mechanical, chemical or biochemical means into a new product by changing the size, shape, composition, nature or quality of such material; and

(b) Assembly of parts into a piece of machinery or other products, but excludes—


  • The installation of machinery or equipment for the purpose of construction; or
  • Any process that is composed primarily of agricultural, pastoral, horticultural or sivicultural activities;


The exclusion of agricultural / horticultural from declaration as an EPZ.

This leaves many asking was EPZ started as catalyst for investment and economic growth? Are EPZA programmes and policies intended to foster a bright investment for investors and further encourage them to take advantage of the numerous opportunities the country offers by virtue of its distinctive location as the ‘gateway to East Africa’? Do the investors in the sector really enjoy the investor-friendly fiscal and monetary policies and supportive political frame work?

Quick mathematics will definitely give you a negative answer as the sector does not enjoy the tax benefits under EPZA investors despite been predominantly an export business not to mention been the highest export earner.

The sector is purely denied:


  • 10 year corporation tax holiday and 25% tax thereafter
  • 10 year withholding tax holiday
  • Stamp duty exemption
  • 100% investment deduction on initial investment applied over 20 years
  • Perpetual duty and VAT exemption on company input including machinery, spare parts , construction material, raw materials, office equipment, packaging, heavy diesel and fuel oil, excluding other petroleum based fuel, motor vehicles that are from outside the zone and motor vehicle spare parts.


In contrast the sector is choked by various taxes which are mugging the investors to near death. Whereas we need to accept that tax evasion is a crime and retrogressive effort for economy growth, we also need to accept overtaxing is anesthetizing the investor. It is not gainsaying to state that the sector is on its worst times calling for the government to intervene especially on taxation to make it more competitive.

Why the cry?
Kenyan growers have been forced to recapitalize their business due to government’s slowness to refund VAT. Value Added Tax which is a general consumption tax assessed on the value of goods and services which applies to all commercial activities involving production/distribution of goods/services and it is ultimately borne by the final consumer which is charged as a % of price – 0%, 12%, and 16% should be refunded. However, the numerous meetings with the revenue authority have yielded nothing with some growers opting for court interpretation. “The revised VAT bill should require, under section 17, the revenue authority to make refunds within 30 days from when the tax payer has lodged a claim. Where payment is not made within the time specified an interest of two per cent per month or part thereof of the tax refunded shall forthwith be due and payable,” said one of the growers who did not wish to be mentioned due to the sensitivity of the matter”.

Adding, “Under sections 17 and 18 of the Bill, the tax payer should be allowed to make an election, where input tax exceeds the amount of output tax due for the period, to either carry forward the input tax deductible in the next tax period or to receive a refund for the amount.