Growers and exporters will continue paying county governments cess on export-bound agricultural produce, even within Special Economic Zones, despite claims that the levy amounts to double taxation and encroaches on the national government’s exclusive mandate over export trade.
This follows a decision by the Court of Appeal to decline to suspend the charges pending appeal in a suit lodged by Royal Herbs Exporters (SEZ) Limited, allowing counties to continue enforcing the levies.
The appellate judges found that although the company had raised arguable constitutional questions, it failed to prove that continued payment of the cess would render its appeal nugatory.
They ruled that the charges are monetary and recoverable if the appeal succeeds, meaning exporters must comply with the county law unless and until it is overturned.
The dispute stems from a November 2025 High Court judgment, which upheld Section 8 of the Nyandarua County Finance Act, 2024, and affirmed the county’s authority to impose cess as a service charge.
Royal Herbs, an SEZ enterprise exporting fresh herbs to global markets, had moved to the appellate court seeking temporary orders to block the cess, arguing it was unconstitutional and harmful to its time-sensitive export business.
The company told the court that it risks ‘business sustainability’ challenges due to cumulative charges and warned that continued enforcement could lead to financial losses and possible job cuts.
It also argued that the county government was not providing any direct services to justify the levy and questioned its ability to refund the fees if the appeal succeeds.
But the appellate judges found that, though the appeal raised arguable issues, an interim relief against the contested levy could not be issued.
‘An arguable appeal is not one which must necessarily succeed,’ the judges said, adding that the case raises issues that should be fully ventilated at the main hearing.
However, the court stressed that the exporter had not met the second legal test required for such relief.
It held that the exporter failed to prove that denying the injunction would render its appeal worthless.
‘The cess that it will pay is well tabulated and monetary in nature. The money paid is recoverable if the appeal is successful,’ the judges ruled.
They added that the law underpinning the charges remains valid unless overturned, stating that statutory provisions are presumed constitutional until declared otherwise.
The decision means Royal Herbs must continue paying cess like other exporters while pursuing its substantive appeal.
The company’s case traces back to a petition filed in May 2025, challenging the legality of cess on horticultural exports and seeking to nullify the county law. It complained of double taxation.
It argued that counties lack authority to impose charges on export goods, a mandate it said belongs exclusively to the national government under Articles 209 and 210 of the Constitution.
The exporter also cited an April 2025 incident in which county officials impounded its truck carrying perishable herbs and demanded Sh161,000 before release, highlighting the commercial risks tied to delays.
But Nyandarua County government defended the levy as a lawful user fee tied to devolved functions, including agriculture, road maintenance, and inspection of produce.
In dismissing the petition, the High Court distinguished taxes and fees.
The court ruled that the Constitution provides that the national and county governments may impose charges for the services they provide.
It said that the petitioner had failed to prove the cess amounted to taxation.
The court found that cess is a charge linked to specific services and must remain proportionate to the benefit provided, rather than a general revenue-raising tax.
Cess is commonly imposed by counties on agricultural produce moving through their jurisdictions, often justified as funding local infrastructure, inspection systems, and extension services.
For exporters, especially those dealing in perishable goods like herbs, the charges add cost and logistical pressure to already tight supply chains.
“It is therefore clear that cess and tax are two separate payments with different purposes. The petitioner seems not to have recognized the differences,” the High Court said.
“Article 209 (4) of the Constitution of Kenya provides as follows: The national and county governments may impose charges for the services they provide. The petitioner has failed to prove how payment of the cess amounts to taxation,” he stated in the contested judgement.
The appellate ruling now strengthens counties’ ability to continue collecting such fees, even on goods destined for export, unless overturned in the main appeal.