The Electronic Tax Invoice Management System (E-tims) requirement on farmers in the avocado sub-sector has taken a new twist after a stakeholder’s forum resolved to shift the burden of registration from farmers to aggregators, abandoning calls to review the legislation contained in Section 23 A of the Finance Act.
The stakeholder’s forum chaired by Cabinet Secretary for Cooperatives, Micro, small and medium Enterprises Simon Chelugui with its membership drawn from Kenya Revenue Authority (KRA), avocado aggregators, farmers and exporters further agreed the deferment of the implementation of the legislation for one month to allow sensitization to aggregators, farmers and exporters.
KRA had directed that all farmers and other businesses to register on E-tims system and transmit invoices electronically by yesterday March 31 with those failing to adhere risking being not able to transact due to their inability to submit their digital invoices to the taxman but with a new window to avocado sub-sector, the legislation will be implemented on May this year.
According to Chelugui, the select stakeholders abandoned calls to review and scrap the requirement after realizing that the requirement ‘was not a tax and its purpose was to safeguard farmers from unscrupulous traders’.
“Etiems is not a tax but a way of identifying and recording information of farmers, so we need to know which farmer is producing how many tons of avocados and how is the process is flowing for the purpose of protecting farmers from exploitation,” Chelugui said in an interview.
He said aggregators who will not fill the E-tims invoice, will take data from the farmers who take their produce to them a move he said will be exempted to the primary growers to concentrate on farming the farm produce reiterating that they will only be taxed in the case of value addition and packaging.
“They (aggregators) are ready and willing to pay taxes but wanted the farmers to be exempted from the burden due to the challenges such as lack of technical know-how and awareness on their respective obligations espoused by the Finance Act,” the Cs said.
He spelled doom for the farmers who will refuse to comply with the resolutions saying the aggregators will not accept their produce as that would jeopardize the intentions of the legislation in promoting fair distribution of income and correcting the market of the avocado sub-sector.
“Those who do not comply will have their fruits abandoned by the aggregators, because the aggregator might end up paying taxes for products he did not pick, and he will need to account how many tons of avocados he picked and from who and any value addition and which exporter he sold the produce to. We want fair distribution of income from the farmers to the aggregators as we correct the market and help in traceability because people will be defining where the avocado came from and if there is a mess, we may even know from which farmers,” said Chelugui.
As a result of the legislation, stakeholders had decried that the sub-sector would collapse after growers refused to sell their produce while those who agreed, sold to oil processors who bought the produce at a throw away price at Sh8 shilling per kilogram where a kilo has about four fruits as opposed to Sh70 per a kilo.
Exporters had also reported that as a result of the confusion, their containers for export had reduced from 350 to 300 while they expressed optimism that with the arrangement, the market would resume heavily.
“We feel there is a good will after our meeting last week and we hope that with the involvement of stakeholders in the sub-sector, the value chain will embark on doing their best to maintain our position in quality production,” Samson Mureithi, the chairperson of Exporters Association said.
However, the Avocado Aggregators Association of Kenya Secretary Sharon Wanjiku said they were looking forward for more engagements with government agencies to understand how much the aggregators will be parting away with to the tax man even as she contended that they will pass over the same to the primary producers.
“We are willing to pay the taxes, but we need a more comprehensive agreement to understand how much we shall pay but of course this goes without saying that this will affect how we buy the same from the farmers,” she said.
According to Wanjiku, government had done little in the avocado sub-sector leaving the aggregators to guide farmers on the best management practices, a move she said necessitates their resolve to negotiate with its agencies on areas of partnership especially in conducting farmers’ trainings, among other areas saying they will be meeting again in the middle of this week.
The impasse brought about by the legislation has been raging since February when farmers and their representatives in the National Assembly chased away the KRA officers who had gone to create awareness to farmers on how they were supposed to board in the E-tims leading to the stakeholders’ consultative forum at Deputy President Rigathi Gachagua’s official residence on March 19 which later led to the formation of a select group that came up with the resolutions on Thursday last week.
