Kenyan hoteliers say high taxes may slow tourism sector recover

Kenya’s tourism and hospitality stakeholders on Monday called on the government to lower taxes and levies in the tourism industry to help attract more domestic visitors and recreate jobs for the youth.
HasnainNoorani, chairman of Kenya Coast Working Group, an umbrella organization of tourism stakeholders, said the sector which has been disrupted by the COVID-19 pandemic risks extreme revenue drop unless taxes and levies at the national and county levels are 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,” Noorani said in a joint statement.
Currently, tourism establishments are paying the statutory 14 percent Value Added Tax and an extra two percent tourism levy to the Tourism Fund.
They also pay for business permits, National Environment Management Authority (NEMA) permit, liquor license at the county level, health and advertising among other permits.
“We don’t have a problem with paying levies since we have to support the government in its endeavors to deliver service. However, some licenses and fees imposed on the industry are a bit punitive. We would appreciate it if some of these licenses were traded off for levies,” said Noorani.
The east African nation’s tourism industry which was once mainly sustained by international visitors, is repositioning itself to appeal to the domestic marketplace in the face of COVID-19.
Of the 14,049 international arrivals recorded in August, 6,368 came to visit family/friends, 3,685 for holiday, 2,325 on business, 1,129 in transit, 221 for education, 194 for medical, 72 for religious purposes, 47 for meetings, incentives, conferences and exhibition (MICE), and eight for sports, according to the tourism and wildlife ministry.
“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).
The tourism stakeholders want the government to scale down taxes in the tourism and hospitality industry so as to attract more domestic merrymakers and recreate lost jobs for the youth especially at a time like this when the economy is negatively impacted by the COVID-19 pandemic.
The industry is currently experiencing the burden of paying taxes during the COVID-19 period when business proprietors are required to remit their dues, renew licenses and 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 the removal of some of the levies,” said Shitakha.
Given the global economic slowdown resulting from COVID-19 pandemic, this year the tourism sector stands to lose.
“Right now, the industry is heavily depending on domestic tourism. Affordability should be at the highest priority, but with the high taxes and licenses, this becomes a major challenge,” added Shitakha.
Counties such as Mombasa, Kilifi, Nakuru introduced a bed levy for every occupied hotel room.

Xinhua News Agency