Kenya has taken a bold new step in expanding its tourism tax net by extending the 2 percent tourism levy to include short-term rental properties listed on platforms such as Airbnb and Booking.com. This move means thousands of property owners who rent out homes, apartments, and holiday houses will now be required to contribute to the Tourism Fund.
Previously, the levy mainly applied to traditional hospitality businesses like hotels, lodges, and restaurants. However, the rapid growth of online accommodation platforms has pushed the government to rethink its approach. Officials say it is only fair that all players benefiting from tourism contribute equally to the sector’s growth and promotion.
Under the new interpretation of the Tourism Fund law, hosts offering short-term stays whether for a few nights or week must pay 2 percent of their gross earnings from bookings made through digital platforms. This applies regardless of whether the host is an individual landlord or a property management company.
The government argues that online rentals have become a major part of Kenya’s tourism industry, especially in cities like Nairobi, Mombasa, and popular holiday destinations along the coast. Many tourists now prefer furnished apartments and homes over hotels, making platforms like Airbnb powerful competitors in the hospitality market.
For hotel owners, the move is long overdue. They have long complained that online rentals enjoy an unfair advantage by avoiding taxes and levies that traditional hotels are required to pay. Bringing digital rentals into the tax system is expected to create a more level playing field.
However, the decision has sparked concern among Airbnb hosts, many of whom fear the levy could reduce their profits or push them to increase prices. Some small-scale hosts say they were already struggling with rising costs, including taxes, maintenance, and compliance requirements.
The Tourism Fund says the money collected will be used to market Kenya as a global travel destination, improve tourism infrastructure, and support sector recovery following years of disruption caused by the pandemic and global economic challenges.As the government increasingly turns its attention to the digital economy, this move signals a wider shift toward taxing online businesses and informal income streams. Authorities insist the era of untaxed digital earnings is coming to an end.
For hosts, the message is clear: short-term rentals are no longer operating in the shadows. As tourism continues to recover, the government wants everyone benefiting from the sector to contribute their fair share to its future.
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