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Plan to transfer tourism fund collection to KRA

Tourists

Tourists enjoying themselves at Bamburi Beach Hotel, Mombasa in this photo taken on November 20, 2021. FILE PHOTO | NMG

The government has set up a team to review proposals to have the Kenya Revenue Authority (KRA) start collecting the two percent tourism levy from hotels and restaurants.

The Tourism Fund said it has formed a team drawing membership from within the agency, its parent ministry and the taxman to agree on modalities of collecting the money.

The fund says it continues to collect the money in the interim as per the law, adding that hotels and restaurants should still remit their levies to it until the process is concluded.

The move to use KRA to collect the levy has industry players worried that money meant to develop tourism will be stuck in the bureaucracy of the exchequer as opposed to the current model where it is collected and quickly deployed.

“Further to the proposal made by the Cabinet Secretary Ministry of Tourism & Wildlife, Tourism Fund received communication from the Head of the Public Service in which we advised to initiate discussion with the KRA to establish the possibility of KRA collecting the tourism levy on behalf of Tourism Fund,” the Fund said in an email response.

The tourism ministry has been pushing to transfer the function from the Tourism Fund as part of a restructuring process.

The move to hand over the collection of the levy to the KRA comes on the back of several State agencies outsourcing the services to the taxman, which is seen as more efficient in the task. Once approved, the taxman will collect the charge on the gross sales derived from the sale of accommodation, food, drinks, and all other services offered in scheduled establishments.

The Tourism Fund collected an average of Sh2.5 billion, according to the Auditor-General's report for the fiscal year ended June 2020 before the fund slumped to Sh1.1 billion in the subsequent year as the Covid-19 pandemic hit the sector.

The levy is collected from establishments charging a minimum of Sh250 per person per night, including the provision of breakfast meals or any other services.

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