Kenya's 2% tourism levy: what hotels and restaurants file by the 10th
Kenya's Tourism Levy Order charges 2% of gross receipts from food, drinks, accommodation and other services, due by the 10th. The record and the penalties.
Hotels, lodges and restaurants in Kenya pay a levy that Ugandan operators do not have: two percent of gross receipts, every month, to the Tourism Fund. It is simple to calculate and easy to get wrong, because it is due on the 10th, it is based on gross receipts by category, and the penalties start the day after. Here is what the order says and how to set up the month so the return is a report rather than a scramble.
The order
The Tourism Levy Order, Legal Notice 198 of 2015, made under the Tourism Act, provides that there "shall be paid by the owner of tourism activities and services specified in the Ninth Schedule of the Tourism Act (Cap. 381) under class 'A' and 'B' enterprises, a levy at the rate of two per centum of the gross receipts derived from their monthly sale of food, drinks, accommodation and all other services". The word "services" takes its meaning from the Value Added Tax Act. The order revoked the earlier Catering Training and Tourism Development Levy Order of 2000, which is why older staff still call it the catering levy.
The Tourism Fund describes its role as the "Collection of 2% Tourism levy from all regulated hotels, restaurants and any regulated tourism activities" in Kenya, and its levy pages now also address new tourism businesses, shared and dark kitchens, online food delivery services and serviced apartments.
The record you must keep
Paragraph 3 of the order requires every owner to "maintain or cause to be maintained a monthly record in the form set out in the Schedule". That form is a monthly levy return with columns for the date and for gross receipts under accommodation, food, drinks, other services and the gross total. Paragraph 4 requires the original of that record to be submitted to the Fund "together with the levy payable for that month on or before the tenth day of the following month".
The four columns are the whole design problem. If your till records a room night, a dinner, a bottle of wine and a laundry charge as four different kinds of sale, the return is a sum. If everything is posted as "sales", somebody has to pull the month apart by hand.
Deadline and penalties
The Tourism Fund states that the levy is due by the 10th of the following month, and that failing to pay by then attracts a "KES. 5,000/- Instant Penalty & 3% Additional Penalty of the amount of Levy Due". Beyond the late payment penalty, the Fund lists offences under the Act and the regulations. Failure to remit the levy carries a fine of up to KES 100,000, imprisonment of up to twelve months, or both. Not keeping a guest register, or keeping a false one, is an offence under regulation 8(3) with the same maximum. Obstructing a levy officer, failing to produce books and records for examination, and knowingly making a false statement are all listed with fines of up to KES 100,000 and imprisonment of up to twelve or eighteen months.
The guest register point is easy to miss. The levy is on receipts, but the inspector who checks your receipts will also ask for the register, and the two should agree: the number of room nights in the register should explain the accommodation column on the return.
Paying through eLevy
The Fund's eLevy platform is accessed through eCitizen. Its payment guide walks through creating an eSlip, choosing M-Pesa, entering the phone number, approving the prompt and entering the PIN, with a confirmation message on success. The Fund also publishes guides on calculating and filing the levy, and a page for new tourism businesses. The Fund warns separately about impostors claiming to be able to influence penalty waivers; deal with the Fund only through its published channels.
A month that ends on the 10th without stress
- Separate the categories at the till. Rooms, food, drinks and other services as distinct sale types from the first day of the month. Service charge, if you add one, should be its own line so you can see it when calculating the levy base.
- Reconcile daily, not monthly. The night audit should close the day with gross receipts by category. Thirty closed days make a return; one open month makes a weekend.
- Keep the guest register current. Every arrival, every night. It is both a legal duty and the cross-check for the accommodation column.
- Draft the return on the 1st. Pull the month's figures, compare them with the bank and M-Pesa statements, and fix the differences while they are a day old.
- Pay by the 8th. Two days of margin for a payment that fails or a portal that is slow. The instant penalty does not care why you were late.
Two percent is not a large number. A KES 5,000 penalty plus 3% for being a day late, every month, is a habit that costs more than the levy. Build the month around the four columns and the 10th looks after itself.
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