Commercial small scale farmers in Kenya will now be required to pay taxes similar to government and private sector employees.
Farmers in Kenya, earning more than Sh.11,800 a month, are set to start paying income tax as part of Kenya Revenue Authority’s drive to meet collection targets.
The targeted farmers will account for nearly half of the nearly two million taxpayers that the KRA intends to recruit by 2018.
Agricultural sector contributes nearly a third of Kenya’s economic output. Presently, small-scale farmers do not pay income tax on their earnings and the KRA expects to net 560,000 tea growers, 150,000 coffee farmers and 250,000 sugarcane growers.
“The following taxpayers are being targeted, commercial small-scale farmers whose income puts them in the taxpaying bracket,” said KRA in a notice in a recruitment drive that will also target about 2.7 million small businesses that are not registered for tax purposes and about 85,000 landlords not paying duties.
Many small and medium businesses do not register voluntarily while those that do often fail to keep adequate records, file tax returns and settle their tax liabilities promptly.
The taxman will have to grapple with poor record keeping among rural-based small scale farmers in what looks set to be chaotic tax collection. Abundant rains helped boost agro production last year, lifting economic growth 5.6 per cent. Farmers will be expected to keep expenditure and sales records to establish their tax dues.