Kenya Homeowners in Airbnb Business Get on Taxman Radar

Airbnb Vacation Rentals

Valued at Kshs. 3.09 trillion, Airbnb is the largest online platform for booking rooms in other users’ homes. Having over three million listings in more than 65,000 cities around the world, Kenya’s appetite the revenue generated through this platform has ballooned.

At the end of 2018, Kenya had more than 6,500 listings according to data from Airbnb, with Nairobi city taking the lead, a projection that highlights potential growth in the business. Until September 2017, hosts in Kenya earned Kshs. 390 million, and in a similar period in 2018, the Kenyan numbers had shot up to Kshs. 510 million. As at September last year, Kenya guest arrivals via Airbnb grew by 68 percent, a domestic avenue that is utilizing the platform.

The commissions charged by Airbnb as compared to other booking agents are much more attractive with boutique and apartment hotels scrambling to fill their rooms using the platform

According to latest figures from the World Travel and Tourism Council, in 2017, Tourism, the continent’s fastest-growing sectors, contributed nearly USD 178 billion to Africa’s gross domestic product and governments cant keep their hands off this new form of tourism hosting.

Tanzania last November asked all the Airbnb operators to register their facilities with the government before the end of the year or face court action. The Kenyan government has followed closely into it’s neighbor’s foot.

After the ministry of Tourism noted that AirBnB hosting is among notable trends that could shape the Kenyan’s tourism performance, the government wants to tax all homeowners listed in the platform.

The Kenya government has decreed that all tourism-related enterprises and expected Airbnb to come forward and be registered, for taxation purposes, set to kick off in July as Tourism Regulations Authority chairman Sammy Nyule said they are in the process getting home owners on board.

“We are working with Airbnb to facilitate registration and remitting of taxes by July. It is being planned. They are supposed to be licensed by TRA after which we can come in,” Mr Joseph Cherutoi, Tourism Fund Chief Executive Officer, said.

Through a Memorandum of Understanding between the authority with Airbnb, the government looks to work hand in hand with the platform together with Kenya Revenue Authority, to effectively collect the tax.

“We will arrange a meeting with them and then write an MoU. After that, once Airbnb collects their commission, they will also collect the levy on our behalf. We are also going to work with the Kenya Revenue Authority,” Mr Cherutoi said.

Some Kenyans feel that the government is overstretching its long tax arm that might spook the Airbnb plunging it into privacy and discouraging more home owners to list on the platform, while others felt it a a good move to create fair competition in the field.

“If somebody is going to do business and not pay taxes, then it is actually a disservice and it is creating an uneven playing field,” noted the Kenya Association of Hotel keepers and Caterers (KAHC) Coast branch executive officer Sam Ikwaye.

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