Airbnb Hits Hosts With New KRA Tax

A airbnb in Kilimani estate, Nairobi.
An Airbnb in Kilimani Estate, Nairobi.
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Airbnb operators in the country have been hit with a new tax by the Kenya Revenue Authority (KRA) for using the platform to offer hosting services.

In line with new regulations, a host will have the sum that is to be remitted to the government automatically calculated and deducted as per the charges.

An operator speaking to Kenyans.co.ke confirmed that the tax deductions were enforced on the application.

"Before this (digital tax), Aibnb would only deduct its commission but today when I checked my payment, it had a sixteen percent VAT deducted," the Airbnb host stated. 

The amount of money a host made before the VAT tax (left) the amount deducted with the 16% VAT.
The amount of money a host made before the VAT tax (left) the amount deducted with the 16% VAT.

Hosts ill be subject to 16% VAT as well as a base service fee for the use of the online platform.



Earlier on, the Tourism Regulatory Authority (TRA) commenced an exercise to regulate Airbnb operators in Kenya.

The tourism body is embarking on registering and licensing all serviced apartments, homes and villa operators in the country.

Airbnb and other operators of homestays are required to pay a one-off application fee of Ksh1,000 and an annual license fee of Ksh26,000 per unit and avail copies of certain documents.

Businesses are expected to file their VAT taxes on or before the 20th of the following month.

The penalty on late filing Whichever is higher between, Kshs10,000 and 5% of the tax due.

A business that is late in payment will incur a 5% charge of the tax due and a late payment interest of 1% per month on the unpaid tax until the tax is paid in full.

At the same time, the Digital Service Tax (DST) and the minimum tax came into effect on January 1, 2021. DST is billed at 1.5% of the gross transactional value. 

If one fails to comply with these regulations, KRA  adopt penalties and interests in the Tax Procedures Act 2015. Fines range from between Ksh 100,000 to Ksh 200,000 (subject to consideration) and or a jail term not exceeding six months. 

KRA offices in Nairobi.
A file image of the reception area at KRA offices in Nairobi.
KRA