More than 70 per cent Airbnb operators in Western Kenya tourism circuit are not paying the 2 per cent tourism levy as the law stipulates.
Tourism Act, requires various entities offering accommodation services to remit levies based on income generated every month.
The levy payable is two per cent of income generated per month for accommodation, and the sale of food and drinks among others.
Tourism Fund (TF) Head of Levy Enforcement Barbara Akoth observed that most mapped hospitality industry facilities don’t pay.
Nearly over 45,000 Airbnb establishments aren’t compliant even as many Kenyans now opt for their services rather than lodging in hotels.
Kisumu County, for instance, over the last 15 years, has witnessed unprecedented increase in bed capacity from below 1500 beds to 10,000 beds.
That rise has been contributed by development in town hotels, guest houses, Airbnbs, furnished apartments, resorts, beach hotels. The Tourism Fund has financed some of the developments.
Therefore, TF has now launched an aggressive registration drive of Airbnb’s in an effort to bring them under the tax bracket.
“Most Airbnbs in Western Kenya aren’t paying the levy and some hotels, too, as the Tourism Act requires,” Akoth said
Some hotels, and restaurants are also not paying their monthly dues promptly thus affecting gross tourism revenue returns.
So far, the fund has roped in villas, apartments, restaurants and home-stay facilities as well as hostels and supermarkets running restaurants to pay the levy.
According to TF authorities, any tourism establishment whose gross sales on food, drinks and accommodation amounts to at least KSh250,000 a month is required to pay the levy.
It is also levied on restaurants making over KSh3 million per annum. Failure to pay attracts a penalty of KSh20,000 or six months imprisonment.
In the past, only hotels and big restaurants were required to remit the tax and have induced radical measures to increase TF revenue proceeds per annum.
Staring at hefty penalties, which could throw defaulters out of business, the Tourism Fund (TF), is opting for a win -win deal.
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Instead of taking the defaulters to Court and having them part with hefty penalties for defaulting, TF has opted for an alternative.
Akoth disclosed they have come up with Alternative Dispute Resolution (ADR), a system to help save hoteliers from penalties.
TF is now engaging all the 47 county governments to ensure compliance by hospitality facilities as it trains them on ADR.
“Tourism Fund notifies all serviced apartments to comply with Order 2 of the Tourism Levy Order which provides that: There shall be paid by the owner of Tourism Activities and Services Specified in class A & B enterprises, a levy at the rate of two per centum (2 percent) of gross receipts from the monthly sale of food, drinks, accommodation and all other services,’’ she said.
These include serviced apartments, homestays and villas fall under class A & B enterprises which are also in the tax bracket.
Akoth spoke as TF embarked on a regional sensitisation workshop to induct the industry stakeholders on ADR in Kisumu.
She told the industry stakeholders that no penalties would be affected within the 30-day grace period granted to the businesses.
However, the government will institute legal action against non-compliant businesses after the window lapses if they defy calls.
Victor Ouma, who runs an Airbnb, said the proposed ADR would save them a lot. He also called for fair charges for starters, hoping that the ADR team will categorize the Airbnbs as per their returns.
Robinson Anyal- chairman Lake Victoria Tourism Association and GM, Calfie resort, Kisumu lauded ADR as a good move.
“We appreciate the Tourism Fund for coming up with such a program to sensitize our members on alternative ways of handling disputes in the process of levy collection. This is good,’’ Anyal said
The Tourism Fund CEO was represented by Mrs. Patricia Ondeng-Head of Corporate Marketing and Communication.
By Fredrick Odiero
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