The Kenyan government has announced plans to expand its tourism levy to cover short-term rental accommodations, bringing platforms such as Airbnb, Booking.com, Jumia Travel, and other digital booking services into the country’s formal tourism tax framework.
Under the proposed changes, short-term rental operators will be required to pay a 2% tourism levy on bookings, aligning them with hotels, lodges, and serviced apartments that already contribute to the levy.
Officials say the initiative is part of broader efforts to modernize revenue collection, strengthen oversight of the fast-growing short-term rental market, and promote fair competition across the tourism sector.
Formalising the Short-Stay Economy
The tourism levy, established under the Tourism Act of 2011, is currently charged on licensed tourism enterprises and paid into the Tourism Fund, which supports destination marketing, infrastructure, and sector development.
By extending the levy to short-term rentals, authorities aim to capture revenue from a segment that has expanded rapidly but largely operated outside the formal tax net. The government has set a deadline of June 2026 for platforms and hosts to comply.
All short-term rental (STR) operators will be required to register with the Tourism Regulatory Authority, while digital platforms will integrate the levy directly into their payment systems. This “tax at source” model ensures the fee is automatically deducted and remitted, reducing compliance burdens on individual hosts while improving transparency.
Industry Response
Analysts note the move follows years of lobbying by traditional hoteliers, who argued that digital platforms enjoyed an unfair advantage by avoiding taxes and regulatory requirements.
For the financial year ended June 2025, the Tourism Fund collected KES 5.1 billion. By tapping into the STR market, the government expects a “considerable increase” in collections, strengthening funding for tourism promotion and infrastructure.
Impact on Hosts and Travelers
For property owners and hosts, the levy introduces an additional cost that may influence pricing strategies, particularly in price-sensitive segments. Analysts expect some of the cost will be passed on to consumers, leading to modest increases in booking prices.
Travelers using short-term rental platforms may therefore see slightly higher accommodation costs. However, officials emphasize that the long-term benefits of a better-regulated and better-funded tourism sector outweigh the short-term impact.
Level Playing Field
The expansion of the levy has been welcomed by traditional hotel operators, who see it as a step toward creating a level playing field. Industry stakeholders say the move will ensure all accommodation providers contribute fairly to the growth and promotion of Kenya’s tourism industry.
