Kenya: Coast Hotels Seek Lower Taxes to Cope With Covid-19

Passengers at Jomo Kenyatta International Airport (file photo).
15 September 2020

Stakeholders in the tourism industry struggling to remain afloat during Covid-19 period have urged county and national governments to reduce and harmonise taxes levied on them in order to save their businesses.

The players, led by Kenya Coast Working Group Chair (KCWG) and Kenya Association of Hotelkeepers and Caterers (KAHC), said harmonisation of taxes and levies on both levels of government will attract more domestic tourists and further create jobs in the sector.

They warned that Kenya risks losing business to neighbouring competing destinations including Tanzania, Rwanda and South Africa if prices offered are higher.

They cited counties such as Mombasa, Kilifi and Nakuru that have introduced a bed levy for every occupied hotel room. In its 2015/2016 Finance Bill, Mombasa County introduced a monthly room levy of between Sh120 and Sh180 per room, depending on the hotel's size and rating.

KCWG chairperson Mr Hasnain Noorani urged the government to unburden the hospitality sector by abolishing punitive levies.

"Levies introduced by counties coupled with already existing statutory taxes are pushing up the cost of tourism products," he said.

KAHC Coast executive Dr Sam Ikwaye said Kenya's tourism and hospitality industry is heavily burdened by duplication of levies including from the National Environment Management Authority (Nema), Tourism Regulatory Authority and high cost of water and electricity.

High taxes

"Our taxes are extremely high for any tourism investor. Policies are also another issue, but I blame the counties which are hell-bent on duplicating the levies and taxes. The national government should harmonise the levies to reduce the cost of doing business," he said.

Mr Noorani said currently, tourism establishments are paying the statutory 14 per cent Value Added Tax and an extra 2 per cent tourism levy to the Tourism Fund.

The players also pay for business permits, Nema permit, liquor licence at county level, health and advertising among others.

"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 too expensive as a destination," said Victor Shitakha, chairman of the Kenya Coast Tourism Association (KTCA) in a statement.

"The industry is currently experiencing the burden of paying taxes during this Covid-19 period when business proprietors are required to remit their dues, renew licenses and others do renovation after lockdown," Mr Noorani added.

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