Kenyans To Pay More To KRA As New Monthly Levy Introduced

Kenyans are set to face increased costs, particularly for sugar, following the government’s introduction of a new 4% Sugar Development Levy (SDL), effective from July 1, 2025. This monthly levy is payable to the Kenya Revenue Authority (KRA) and is designed to revitalize the struggling sugar industry.

Key Details of the Sugar Development Levy (SDL):

• Effective Date: July 1, 2025.
• Rate: 4% of the ex-factory price for domestically produced sugar, and 4% of the Cost, Insurance, and Freight (CIF) value for imported sugar.
• Who Pays: The levy is payable by all millers and importers of sugar.
• Payment Deadline: Remittance to KRA is due by the 10th day of the month immediately following the month when the domestic sugar was sold, or when the sugar was imported. The Ministry of Agriculture has appointed KRA as the collection agent and KRA is expected to issue further guidance on the specific mode of collection.
• Purpose of the Levy: According to the Ministry of Agriculture, the SDL is a crucial part of efforts to strengthen the sugar sector. The funds collected will be channeled towards; Development, promotion, and regulation of the sugar industry, Price stabilization, infrastructure development in sugarcane-growing regions, research and training, support for sugarcane farmers, rehabilitation of state-owned factories, specific allocations are: 40% for cane development, 15% for factory development, 15% for research, 15% for regional infrastructure, and 5% for farmers’ organizations, with 10% for the Kenya Sugar Board’s administrative duties.

  While the government aims to boost the sugar industry, stakeholders and analysts widely anticipate that this additional cost will lead to higher retail sugar prices for consumers. This comes after a period of significant price drops for sugar in late 2024. The new levy, coupled with an earlier increase in excise duty on imported sugar (from 5% to 7.5% in the Tax Laws Amendment Act 2024), is expected to reverse any consumer relief from lower prices.

This new monthly levy is part of broader tax reforms outlined in the Finance Act, 2025, which came into effect on July 1, 2025 (with some exceptions). The Act introduces various other changes affecting different sectors and taxpayers, including amendments to income tax, VAT, and excise duty, all aimed at bolstering government revenue and achieving specific economic objectives.