A taxman will collect a tax on tourism as part of the reforms of the ministry
The Kenya Revenue Authority (KRA) is about to start collecting the 2% tourist tax from hotels and restaurants.
This follows pressure from the Ministry of Tourism to transfer the function of the Tourism Fund as part of a restructuring process.
The decision to entrust the collection of the tax to the KRA comes from the fact that several state agencies outsource the services to the tax department, which is considered to be more efficient in the task.
The tax authorities can now collect the royalty on gross sales from the sale of accommodation, food, beverages and all other services offered in the scheduled establishments.
In a letter to Head of Civil Service Joseph Kinyua, Cabinet Secretary Najib Balala said collection of the tax would be transferred to the KRA as part of the ministry’s restructuring.
“This letter therefore seeks to inform you of the action taken by the ministry and to request that you communicate with the Kenya Revenue Authority to take immediate action on the collection of tourism tax by the Tourism Fund,” reads -on in the letter.
The Tourism Fund collected an average of 2.5 billion shillings in levy revenue, according to the Auditor General’s report for the financial year ending June 2020 before the fund fell to 1.1 billion shillings the following year , the Covid-19 pandemic having affected the hotel sector.
The tax is collected from establishments charging a minimum of 250 shillings per person per night, including the provision of breakfasts or any other service.
It is also levied on restaurants with minimum gross sales of 3 million shillings per year.
The levy collected from hotels and restaurants is used to fund the training and operations of Utalii College, develop industry standards and fund the Kenya Tourism Board to promote the country as a tourist destination both locally and internationally.
Trustees of the Tourism Fund have also launched the construction of its office building on Valley Road.
This will be the last term of the KRA, which in March 2020 was selected as the Principal Revenue Collector for the Nairobi County Government pursuant to a Deed of Transfer.
The act gave the KRA unrestricted access to the county’s tax process information data system, including the records and documents needed to execute the warrant.
The KRA also collects levies for the National Industrial Training Authority (NITA) and the Industrial Training Levy, where employers are required to pay a monthly charge of 50 shillings per employee, including a casual worker.
Payment is made through a unified payroll system provided by KRA which acts as the collection agent.