The high cost of producing and selling sugar in Kenya accompanied by restrictions instituted by the Kenyan government on the importation of sugar are major hurdles hindering competitiveness in the sugar industry.
The sugar industry in Kenya is unable to favorably compete with industries from other nations because of the high cost of production which is not cost effective.
One of the factors that have led to the high cost of production in the sugar industry is the taxation that is not favorable to potential industry players.
Heavy taxation is pushing up production costs in the sugar industry and there is need for the government to offer tax incentives, especially for sugar factory machinery.
Kenya taxes sugar a total of 24 percent of the total production cost and yet, sugar competitors from most COMESA countries have abolished such taxes and hence the cheap production and the stiff competition.
The sugar sector is exposed to four levels of taxation- 16 percent Value Added Tax (VAT), 4 percent Sugar Development Levy (SDL), 30 percent corporation tax and 1 percent CESS tax that was previously levied by the former local authorities.