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Taxman to collect tourism levy in ministry reforms


Times Tower in Nairobi, the headquarters of Kenya Revenue Authority (KRA). Picture taken on Thursday, October 15, 2020. PHOTO | DENNIS ONSONGO | NMG

The Kenya Revenue Authority (KRA) is set to start collecting the two percent tourism levy from hotels and restaurants.

This follows a push by the Tourism Ministry 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.

The taxman may now collect the charge on the gross sales derived from the sale of accommodation, food, drinks, and all other services offered in scheduled establishments.

In a letter to Head of Public Service Joseph Kinyua, Cabinet secretary Najib Balala said collection of the levy would be moved to the KRA as part of the restructuring of the ministry.

“This letter is, therefore, to update you on the action taken by the ministry and to request you to communicate to Kenya Revenue Authority to take immediate action on collection of the tourism levy by the Tourism Fund,” read part of the letter.

The Tourism Fund collected an average of Sh2.5 billion in levy income, 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 hurt the hospitality 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.

It is also levied on restaurants making minimum gross sales of Sh3 million per annum.

The levy collected from hotels and restaurants is used to finance 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.

The Tourism Fund trustees also initiated the construction of its office block on Valley Road.

This will be the latest mandate for the KRA, which in March 2020 was picked as the principal revenue collection agent for the Nairobi county government in line with a Deed of Transfer.

The deed gave the KRA unlimited access to the county’s revenue process information data system, including the records and documents necessary for the execution of the mandate.

KRA also collects levies for the National Industrial Training Authority (NITA) and Industrial Training Levy where employers are required to remit a monthly charge of Sh50 per employee including a casual worker.

The payment is done through a unified payroll system provided by KRA which acts as the collecting agent.

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