Thousands of sugarcane farmers in Migori County are locked in a bitter dispute with the Kenya Revenue Authority over what they describe as punitive and exploitative taxation under the new electronic Tax Invoice Management System, with some growers facing bills that far exceed their actual earnings.
The farmers, drawn from the expansive sugar belt of Awendo and Uriri Sub-Counties, expressed their frustrations on Wednesday, claiming they are being slapped with hefty tax notices despite earlier assurances that eTIMS would not result in additional financial burdens. Speaking during a press briefing at Ulanda in Awendo, the growers lamented that the taxman is targeting gross payments from millers without considering the high costs of production.
Those costs include land leasing, seed cane purchase, tillage, and labour, none of which are easily documented under the digital system that requires electronic invoices for every expense.
Farmer faces Sh450,000 demand on Sh5,000 account balance
Joseph Otieno, a farmer from East Kanyamkago location, narrated a harrowing ordeal of receiving a tax demand of over Sh450,000, an amount he says far exceeds his actual earnings. He accused KRA officials of backtracking on assurances given during earlier sensitisation meetings.
“We were told by KRA officials, Mr Wycliffe and Mary Atieno, that if we registered for eTIMS, we wouldn’t have to pay these taxes. We were comfortable then. But three months later, I am told to pay over Sh450,000. Where am I supposed to get that money? My account currently has only Sh5,000,” Otieno lamented.
The farmers noted that while other crops like maize, coffee, and tea appear to be spared, the sugarcane sector is being singled out, particularly those supplying to Sukari Industry in Ndhiwa.
System ignores farming realities, growers say
The growers argued that the nature of sugarcane farming makes it difficult to comply with eTIMS requirements for expenses, as most services are provided by casual labourers who do not have digital invoicing systems. Sugarcane has a long production cycle, taking between 18 and 24 months from planting to harvest, during which farmers incur significant costs paid informally.
“When someone weeds or harvests for you in the village, you cannot generate an ETR receipt for them. The KRA is taxing our gross income, not knowing we have heavy expenses. After two years of waiting for the crop, you might find your actual profit is a mere five per cent of the investment,” said another grower.
Industry experts have warned that under eTIMS, only gross cane proceeds are recorded on miller-generated invoices, with no mechanism to capture the expenses farmers bear during the long growing cycle. The Sugar Campaign for Change has previously cautioned that this approach could result in farmers being taxed on losses rather than actual income.
Millers accused of shifting tax burden
Caleb Okello, a farmer and resident of East Kanyamkago, accused millers of colluding with the taxman to shift the tax burden onto growers.
“We are being robbed in broad daylight. I cannot give them sugarcane worth Sh400,000 and then they tax the whole amount. That is my working capital. If this continues, we will block the factory gates. We are ready to go to court because this is not realistic,” Okello warned.
Under current arrangements, millers generate payment statements that eTIMS treats as sales invoices, a practice that SUCAM argues fundamentally misunderstands how income is generated in sugarcane farming.
MCA calls for urgent meeting, cites tax law violation
Echoing the farmers’ sentiments, East Kanyamkago Ward Representative Norman Ogola, who is also a victim of the new tax demands, called for an urgent meeting between farmers, KRA, and local leadership. He argued that the taxation approach violates basic tax law principles.
“The law of taxation states that you tax profit, not gross turnover. In that Sh400,000, there is money for leasing the farm, ploughing, maintenance, and transport. KRA must come out clearly and explain what is taxable and what is not,” Ogola stated.
The MCA urged Members of Parliament from the region to take up the matter in the National Assembly before the looming deadline for filing returns. He warned that if KRA does not come to the table for dialogue, they would seek other channels to protect farmers from being driven into poverty.
Farmers threaten to ditch sugarcane
The visibly dejected farmers threatened to abandon the crop if the government fails to intervene. They have now issued a petition to the Ministry of Agriculture and their respective area representatives, vowing to cease cane supply if the unfair taxation is not resolved.
The dispute highlights a broader challenge with eTIMS implementation across Kenya’s agricultural sector. Under rules effective January 1, 2026, KRA requires that every commercial transaction be supported by an electronic tax invoice, even when buying from smallholder farmers. This requirement has created friction across food supply chains, with small-scale producers who have never operated in formal tax systems now facing compliance demands they say are impossible to meet.
For now, Migori’s sugarcane farmers say they are prepared to block factory gates and seek court intervention, unwilling to watch their hard-earned produce disappear to tax demands that bear no relation to their actual profits.
