Kenya moves fertilizers and agricultural pest control products from zero-rated to VAT-exempt

What changed in detail

Section 22 of the Tax Laws (Amendment) Act, 2024 (No. 12 of 2024, Kenya Gazette Supplement No. 215 of 13 December 2024; commenced 27 December 2024) amends Part A of the Second Schedule (zero-rated supplies) to the VAT Act, CAP 476, by deleting four paragraphs:

• paragraph 16, inputs for agricultural pest control products;
• paragraph 19, agricultural pest control products;
• paragraph 24, fertilizers of Chapter 31;
• paragraph 25, fertilizer inputs.

The same goods are inserted into Part I of the First Schedule (exempt supplies) as new paragraphs 149 to 152 by section 21 of the Act (ke-vat-tlaa-2024-first-schedule). From 27 December 2024 their supply is exempt rather than zero-rated.

What it means

Exempt and zero-rated both mean no VAT on the sale, so the change is invisible on the invoice to a farmer. It is not invisible to the supplier: zero-rating allows input VAT on costs to be recovered, exemption does not. Fertilizer and pest-control manufacturers and distributors lost that recovery from 27 December 2024, and input VAT they incur is now a cost that tends to work its way into prices. Nothing in the frozen record shows this reversed; treat the exempt status as the position unless a later change says otherwise.