Effective July 1: 4% Levy Comes into Force
Kenya’s Ministry of Agriculture has officially implemented a 4% Sugar Development Levy on both locally milled and imported sugar, effective July 1, 2025 .
The levy is calculated at:
- 4% of the ex-factory price for domestic sugar, payable by millers
- 4% of the FOB/CIF value for imported sugar, payable by importers
Collections are to be submitted to the Kenya Revenue Authority (KRA) by the 10th of each month for the previous month’s activity .
Goal: Reinvigorating the Sugar Sector with KSh 4 Billion Annually
The government expects to raise KSh 4 billion each year from the levy, channeling the funds into:
- Cane development programmes (40%)
- Road and factory infrastructure (approx. 15% each)
- Research and productivity innovation (approx. 15%)
- Farmer organizations (5%) and the Kenya Sugar Board (10%)
Agriculture CS Mutahi Kagwe emphasized the levy’s role in securing the sector’s long-term sustainability
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Impact: Consumers Face Higher Sugar Prices
Retail sugar prices are expected to rise following this new levy. In January 2025, prices surged by nearly 10%, rising from KSh 168.59 to KSh 184.13 per kg, contributing to inflationary pressure (3.8% in June) . As millers pass on the cost to retailers and consumers, household budgets will feel the pinch.
Next Steps: KRA Notification and Stakeholder Guidance
KRA will soon issue official notices outlining payment schedules and methods for the new levy . Farmers, millers, and importers should review their systems to ensure compliance and avoid penalties.
What This Means for Kenya’s Economy
- Revenue boost: The KSh 4 billion levy provides essential funding for enhancing the sugar sector’s value chain.
- Improved infrastructure: Strategic allocation funds productivity and connectivity in cane-growing regions.
- Consumer impact: Adjustments in sugar prices may trigger broader food inflation concerns.
Kenya’s new sugar development levy marks a milestone in agricultural reform. While it secures long-term investments in the industry, consumers should expect increased prices at the store. Millers and importers must now comply actively to avoid penalties and support consistent revenue collection.
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