Industry players want tourism-related taxes scrapped

By Seth Emanuel

Stakeholders in the Tourism and hospitality industry are calling on national and county governments to scrap some of the existing taxes and levies to avoid further delaying the recovery of the sector.

Industry players say that levies introduced by counties coupled with already existing statutory taxes are pushing up the cost of tourism products – a move that has led to extreme revenue drop and now players want such taxes and levies both at the national and county levels harmonized.

“The government needs to reduce too much burden on the hospitality and tourism sector. Kenya risks losing business if prices offered are way above our neighboring competitors for instance Tanzania, Rwanda, South Africa and other countries,” said Hasnain Noorani, Kenya Coast Working Group Chair and Managing Director for PrideInn hotels.

Currently, tourism establishments pay for statutory 14 per cent Value Added Tax and an extra two per cent tourism levy to the Tourism Fund. They also pay for business permits, National Environment Management Authority permit, and liquor license at county level, health and advertising among other permits.

Chairman of Council of Governors (CoG) Kakamega Governor Wycliffe Oparanya in an exclusive interview on Friday called on conventional duties to be harmonised at the Counties rather than at the national level to avoid duplication of levy collections.

“We have a proposal on the table on national policy on Economic blocs which we hope through a uniform taxation system will be able to solve some of these challenges,” said Mr. Oparanya.

“Despite many levies being long-standing in nature, there has been a general increase in the number and scope of tourism-related taxes, fees and charges over the last couple of years. The higher taxes make Kenya as a destination too expensive,” said Victor Shitakha, Chairman of the Kenya Coast Tourism Association (KTCA).

Stakeholders want the government to scale down taxes in the sector so as to boost domestic tourism while at the same time recreate lost jobs brought by Covid-19 pandemic.

The industry is currently experiencing the burden of paying taxes during this Corona period when business proprietors are required to remit their dues, renew licenses and others do renovation after lockdown.

“With hotels and other tourism establishments reopening, some hoteliers may find it hard to remain afloat. They are struggling to pay the levies and still sustain the workforce and pay suppliers and other bills. We urge the government to consider removal of some of the levies,” said Shitakha.

Counties such as Mombasa, Kilifi, and Nakuru introduced a bed levy for every occupied hotel room. In it’s 2015/2016 Finance Bill, Mombasa introduced a monthly room levy of between Sh120 and Sh180 per room, depending on the hotel’s size and rating.