Tourism stakeholders call for tax incentives to aid recovery

Written By: Ronald Owili

Tourism stakeholders are calling on the government to reduce taxes imposed on the industry to kick-start the industry after COVID-19 brought the sector to a halt.

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Kenya Coast Tourism Association says the current tax regime in both the national and county governments are unsustainable in the face of a global pandemic.

“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.

According to KTCA, tourism establishments are paying the statutory 14 percent Value Added Tax and an extra two percent tourism levy to Tourism Fund.

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Operators are also required to pay for business permits, National Environment Management Authority permit, and liquor license at the county level, health, and advertising among other permits.

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“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, Managing Director for PrideInn Hotels.

Reduced levies have been backed as critical in attracting domestic tourism as international travel takes a hit.

“Right now, the industry is heavily dependent on domestic tourism. Affordability should be at the highest priority, but with the high taxes and licenses, this becomes a major challenge,” added Mr. Shitakha

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Counties like Mombasa, Kilifi, and Nakuru have introduced a bed levy for every occupied hotel room. In its 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 which the stakeholder have termed punitive.

Resumption of international flights

According to data from the Ministry of Tourism and Wildlife, family and friends dominate international arrivals in August when Kenya resumed international flights after a four-month suspension.

Visits to family or friends accounted for 45.33 percent of the total number of visitors which totaled 14,043, data from the Ministry of Tourism and Wildlife shows.

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The sharp drop reveals the impact the coronavirus pandemic has had on the tourism sector. Last year, arrivals during the same month totaled 213,591.

According to the figures released on Friday by Tourism and Wildlife Cabinet Secretary Najib Balala on Friday visitors who came for holiday accounted for 26.23 percent of the total number of visitors.

Business visitors made up 16.55 percent, transiting visitors 8.04 percent, medical 1.38 percent, education 1.57 percent.

The majority of visitors came from the USA with 2,768, UK 2,469, Uganda 506, Germany 498, and the Netherlands 493.

JKIA accounted for the majority of arrivals with 13,249, Moi International Airport Mombasa 645, Wilson 154, and Wajir Airport 1.

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