Jana Fedakova, one of the VIKES training participants was granted the first grant from the project budget to visit Zanzibar and Kenya in December 2015. She was finding out there what influence the boom of tourism focused on rich foreign tourists has on inhabitants of Zanzibar, how Kenya manages to mobilize domestic resources and what is the business environment like in this country.
Truth about tourism in Zanzibar
The island on the East coast of Africa has become a holiday destination for a rising number of people and the government is proud of the number of tourists that already reached 200.000. But there is poverty behind the walls of luxury resorts. Not only the inhabitants of Zanzibar do not benefit from the tourism but the West tourists bring to this Muslim island the behaviour not acceptable by local culture.
|Photo: J. Fedakova, Zanzibar beaches attract tourists|
Kenya offers 10 year tax holidays, investments increased twice
Have you decided to start your own business? Try it in Kenya. If you invest a million of USD you are not obliged to pay the income tax until your profit reaches one and half millions of USD. Dr. Moses Ikiara the Managing Director of the Kenya Investment Authority (KenInvest) sees this a good way how to attract foreign investments in the country. Despite warnings of non-profitable organizations that thanks to transactions within own corporations, the multinational companies manage to declare profits close to zero.
African countries overtake each other in tax incentives, says expert
According to Alvin Mosioma, the founding Executive Director of Tax Justice Network - Africa, a lot of African countries face the challenge to collect income taxes from their inhabitants. They are paid only by a small group of inhabitants and the grey economy dominates. In his view, it is not good that countries depend on the consumption tax like VAT because if people do not have enough money for purchasing then the states do not gather enough this way. He does not find this tax fair as the poor and the rich pay the same tax rate.
In Kenya, all employees pay income tax at the rate that depends on how much they earn. Small businessmen like taxi drivers and farmers do not pay income tax because it is difficult to define their income. They pay VAT that is connecting to their business activities. The big companies apply the rule of double taxation - if they operate in two countries they pay taxes in only one. Kenya has got an agreement on double taxation with Mauritius. If a company registers there to pay taxes there, it does not pay taxes in Kenya. But it pays taxes neither on Mauritius because of high tax benefits.
|Photo: Archive: Alvin Mosioma|