Government mulls taxation holiday for tourism sector

Monday, May 18th, 2020 00:00 |
Local tourists flock to Jomo Kenyatta public beach last December, a few months before coronavirus pandemic hit. The State is considering setting up a credit scheme to help the hospitality industry recover from effects of the pandemic. Photo/PD/File

Lewis Njoka @LewisNjoka

The government is considering tax deferment for the tourism sector to cushion the industry from Covid-19 pandemic economic shocks, the ministry has said.

Global and local Covid-19 mitigation measures, comprising travel bans, lockdowns and curfews among others, have hit the local tourism sector hard with some hotels and tour operators having to lay off employees.

Speaking last week during an online tourism conference, Tourism PS Safina Kwekwe Tsungu said the interventions would enable employees retain their jobs and  help businesses to remain afloat during the pandemic.

Credit scheme

“We are for example rooting for a tax deferment so that entrepreneurs can inject this money into their business.

We have also been discussing the tourism recovery credit scheme which is meant to cushion the industry and ensure that we retain as many jobs as possible” said the PS.

Tsungu, however, called on all industry players to collaborate on the matter saying the government could not do it alone.

Tsungu’s sentiments were echoed by Kenya Tourism Board chief executive Betty Radier who said past Covid-19, the tourism products must address the needs of the new traveller as opposed to the traditional needs.

“Going forward, expectations will be different, which means we must start getting ready for them.

The domestic market offers a new prospect now, but even so, we must be ready to offer diverse quality products to suit our client’s expectations”, said Radier.

Re-opening airports

The sentiments by the PS come at a time when the government is considering re-opening local airports to international flights, a move that will serve to boost the tourism and travel industry in the country. 

Tax deferment will be a shot in the arm for Kenya’s tourism sector which defied terror threats and global geopolitics last year to post Sh163.6 billion, a 3.9 per cent growth compared to 2018.

Despite crossing the two million visitors mark for the first time ever last year, the 3.9 per cent growth was minimal compared to the 37.3 per cent posted in 2018.

Tourism is Kenya’s second largest foreign exchange earner after diaspora remittances.

In the recent past, the government has put in place several measures to cushion individuals and businesses from the effects of the global pandemic.

These include reducing corporate tax from 30 to 25 per cent, 100 per cent tax relief for those earning less than Sh24,000 a month, reduction of value added tax (VAT) from 16 to 14 per cent and the reduction of turnover tax from three to one per cent, among other measures.

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