VAT on conservancy entrance fees impacts on conservation funds


(Posted 05th September 2013)

In order to soften the massive blow the Kenyan government has dealt the country’s tourism industry by introducing a 16 percent VAT charge on a range of previously exempt tourism services, have some operators announced some short term relief for their clients by reducing tariffs in order to cushion the major rise in cost now underway for safari services across the country.

Ol Pejeta was as usual swift in getting out of the starting blocks by announcing a temporary reduction in entrance fees to the conservancy, when Richard Vigne, CEO of the conservancy and ranch, sent out this information yesterday afternoon:

Update on New VAT Act, The Imposition of VAT on Conservancy Entrance Fees
Dear Friend,

Further to our correspondence of Monday, September 2nd, 2013, we have re-confirmed with the tax authorities that VAT is now payable against sales of Conservancy entrance fees and that VAT became chargeable on the 2nd September 2013.

In the opinion of numerous tax advisors and the KRA this applies to entrance fees to the National Parks, Game Reserves, Private and Community Conservancies with no exception.

The Ol Pejeta Conservancy is simply not in a position to simply absorb the cost of VAT on entrance fees, and we have very little input tax that we can claim against output VAT levied on entrance fees.

However, during this period of confusion, and in acknowledgement that our tourism partners and the tour operators using our accommodation facilities have already billed their clients, we are prepared to offer an immediate discount on entrance fees for overnight stays for overseas clients as follows:

· From USD 70 per adult to USD 65 per adult per entry and overnight stay

· From USD 35 per child to USD 32.50 per child per night entry and overnight stay

These discounted rates will continue to attract VAT and the offer will extend to 1st November 2013, whereupon we regret that our rates will revert to current published tariffs against which VAT at 16% will be levied.

We hope very much that this assists during this transition period.

Your Sincerely,

Richard Vigne
Chief Executive Officer

Click here to unsubscribe from this list.

Some of the more outspoken regulars who contribute facts, opinions and feedback, have sharply condemned the Kenya government and in particular parliament for having passed the bill in its present format, and spared no criticism for President Kenyatta either for assenting to the bill and make it a law, as in the words of one ‘they are now robbing conservation of funds. Ol Pejeta is a good example. They are lowering entrance tariffs to as you say cushion the impact but it takes away money which was budgeted for conservation. This government should not wonder what it has coming now. It is time to take the gloves off and take them to task. What they publicly say about tourism and conservation is different from their actions. They should cut the bloated civil service. They should cut wastage in government expenditure. Kenyans are not paying taxes to eternally feed fat cat politicians and give them millionaire life styles. Whatever good plans this government has is being spoiled by such action. We are all in this together like it or not and this move on taxes does not, absolutely not support tourism or create an environment in which tourism can grow. We all know the coast is struggling and that is a very important element in our industry. You said south coast occupancies are down to some 35 or so percent compared with 65 two years ago? It is time for our industry captains to tell the president and the minister some hard facts whether they like it or not. If we don’t act now we might lose another year and our competition does not sleep. South Africa will be laughing about our foolishness to add VAT to tourism services while we shoot ourselves in the foot’. Time as usual will tell and the answers, if KTB is getting the extra 3 billion the president promised or if the government will review its VAT policy, considering that tourism is an invisible export, will be featuring right here, so watch this space.