The Tourism Fund in Kenya is renewing efforts to bring Airbnb hosts under the tax bracket by imposing a 2 percent tax on their earnings. This comes as estimates show that only 400 out of 40,000 Airbnb hosts in the country are currently registered and paying taxes.
Airbnb has become an increasingly popular platform for Kenyans to rent out their homes or apartments to travelers. However, the vast majority of these hosts are not registered with regulatory agencies like the Tourism Regulatory Authority (TRA) or county licensing organizations.
This lack of regulation and tax compliance has been a major concern for the Tourism Fund and government. Officials estimate the country loses out on millions of shillings in uncollected revenue as travelers opt for unregulated Airbnbs over traditional hotels that are subject to taxes.
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The Tourism Fund is requiring all Airbnb hosts to register and pay a 2 percent tax on their earnings. This is the same tax that is currently imposed on traditional hotels and lodges. Registration involves submitting copies of business licenses, permits, and other documents.
Airbnb Africa has pledged to cooperate with the registration and sensitization effort to get its hosts to comply. But some hosts remain concerned about the costs and red tape involved.
Under the Tourism Fund’s requirements, hosts must pay a KES 1,000 one-time application fee and KES 26,000 annual license charge per rented unit. Businesses also need to file monthly Value Added Tax (VAT) reports.
Failure to register an Airbnb can result in penalties, according to public warnings issued by the Tourism Regulatory Authority. However, the government aims to incentivize compliance by making the registration process smoother and offering tax deductions.
Officials hope to register at least 8,000 new Airbnb hosts over the next year. They estimate this could generate 500 million shillings ($4.2 million) in annual tax revenue that can support tourism infrastructure and promotion. But stakeholders acknowledge it will take a mix of enforcement and incentives to get hosts on board.
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