Sugar prices set to rise as new levy takes effect

In a notice, the Ministry of Agriculture said the levy must be remitted by the tenth day of the month following the sale or importation, with the Kenya Revenue Authority (KRA) appointed to collect the charges.
The government has enforced the four per cent sugar levy, pushing retail prices up as Kenyans brace for increased costs on both local and imported sugar.
In a notice, the Ministry of Agriculture said the levy must be remitted by the tenth day of the month following the sale or importation, with the Kenya Revenue Authority (KRA) appointed to collect the charges.
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“The State Department for Agriculture would like to inform members of the public that the Sugar Development Levy is now in effect from July 1, 2025,” reads the notice.
The levy is payable by every miller and every person who imports sugar, at a rate of four per cent of the ex-factory price for domestic sugar and four per cent of the cost, insurance and freight (CIF) value for each consignment of imported sugar.
“The levy shall be remitted by the tenth day of the month immediately following the month when the domestic sugar is sold, and by the tenth day of the month immediately following the month when the sugar was imported,” the Ministry said.
The Cabinet Secretary for Agriculture and Livestock Development, Mutahi Kagwe, has appointed KRA as the collection agent for the levy. KRA confirmed the development through its X handle, @KRACare, noting it will issue a separate communication on the mode of collection.
The new levy follows the signing into law of the Sugar Act of 2024 by President William Ruto. The legislation gives the Agriculture CS powers to introduce the levy as a way of financing key operations in the sugar industry.
According to the Act, funds raised through the Sugar Development Levy will go towards price stabilisation, infrastructure development, and research within the sector.
Allocations from the levy are structured as: 40 per cent for cane productivity, 15 per cent for factory development, 15 per cent for research,
15 per cent for infrastructure development in sugarcane-growing regions and five per cent for farmers’ organisations.
The implementation of the new levy is expected to raise the cost of sugar, which has recently seen a significant price drop. It also comes months after the government raised the excise duty on imported sugar from five per cent to 7.5 per cent through the Tax Laws Amendment Act 2024.
The tax measures are likely to put upward pressure on sugar prices in the domestic market, reversing recent gains made through improved local production.
According to the Kenya National Bureau of Statistics (KNBS), the average price of a kilo of sugar in December 2024 was Sh159.69, a 25.4 per cent drop from Sh214.20 in December 2023.
While consumers had enjoyed some relief at the time, the introduction of the Sugar Development Levy and the higher excise duty are expected to erode those gains, leaving Kenyans grappling with rising sugar prices once again.
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