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VAT exemption for locally assembled tourist vehicles as hoteliers get credit facility

The government has allocated Sh2.7 billion to boost the tourism sector in this year’s budget where Sh1 billion will be used for full sector recovery, Sh1billion for sustaining new markets/FILE

NAIROBI, Kenya, Mar 30 – The government has announced the exemption of Value Added Tax (VAT) for locally assembled tourist vehicles.

Treasury Cabinet Secretary Henry Rotich says the move is aimed at encouraging tourist operators to buy vehicles locally at a lower cost.

“The tourism industry has been growing steadily despite adversities experienced in industry. In order to promote tourism further, and to make Kenya a tourism hub, I propose to exempt from VAT locally assembled tourist vehicles,” he announced.

He says apart from promoting tourism sector, the measure has taken into consideration current policy of the government to encourage local motor vehicle assembly.

Meanwhile, the government has allocated Sh2.7 billion to boost the tourism sector in this year’s budget where Sh1 billion will be used for full sector recovery, Sh1billion for sustaining new markets, Sh600 million for capital lending to hoteliers and Sh100milion to finance the revival of Fort Jesus in Mombasa.

He, however, noted the continued improvement of the sector which has previously faced pressure due to security challenges.

“The tourism sector has picked up with significance rise in the conference activities and foreign tourist arrivals. To further realize the multiple benefits of a robust tourism sector the government working with the key shareholders in the industry, will continue to promote and develop new areas of tourism, including sports, beach and medical tourism,” he said.

The number of tourists to Kenya grew by 16.1 percent in 2016 with international arrivals for January to October 2016 by air and sea closed at 729,682 compared to 628,345 in 2015.

He reiterated government commitment to fully revive Kenya Airways (KQ).

“Recognizing the importance of aviation to the industry, the government is keen to keep the positive trajectory that has been achieved at Kenya Airways and is working with other shareholders to ensure that the ongoing efforts, to restructure the KQ balance sheet, and place the company on a long-term sound financial footing is achieved,” Rotich assured.

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Despite the financial support to the tourism sector, Rotich has maintained that the government will remain tough to ensure that service providers give quality hospitality to attract more visitors.

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