NAIROBI, Kenya, May 30 – Betting and gaming firms received a reprieve after the National Assembly approved recommendations by the House Finance Committee to retain betting tax at the current 7.5 per cent from the 50 per cent proposed by National Treasury CS Henry Rotich.
The Finance Bill containing the proposal now awaits presidential assent.
This was a change of heart for the MPs who last week shot down most of the recommendations of the Finance Committee.
Committee Vice-Chairman Nelson Gaichuhie (Subukia) led MPs Ababu Namwamba (Budalangi), Makali Mulu (Kitui Central), Wesley Korir (Cherangany) in rejecting the proposal by the government to impose the levy on the grounds that it is punitive and creates a barrier to the expansion of a growth sector.
There has been uproar from betting and gaming firms who said the punitive tax would deal them a fatal blow.
According to the Association of the Gaming Operators- Kenya (AGOK), such a tax regime was tantamount to discouraging any investment in an emerging sector.
Deputy Minority Leader Jakoyo Midiwo (Gem), Samuel Gichigi (Kipipiri) and Kikuyu MP Kimani Ichungwah reaffirmed their stance that the sector must be regulated, but not through punitive taxation which they termed as being counter-productive.
The firms will now have to pay 7.5 per cent of their revenue to the taxman by the 20th of each month after paying out winnings, while lotteries will pay five per cent of their turnover by the same deadline.
Gaming companies will also hand in 12 per cent of their revenue after paying out winnings.
The debate revealed a growing consensus to a Bill sponsored by Midiwo seeking to establish an authority to license and regulate the activities of betting, lotteries and gaming firms.
The Kenya Betting Control and Licensing Authority will have the power to regulate and control the operation of betting and gaming and conduct of lotteries and prize competition.
For competitions in which one has to pay to take part, the prize competition tax has been set at 15 per cent of the total gross turnover.
Nakuru East MP David Gikaria, who is also a Football Kenya Federation official, Korir (the 2012 Boston Marathon Champion) and Namwamba (a one-time Sports Minister) made a case for the sporting fraternity which have been the most visible beneficiaries after securing a sponsorship deal with the betting firms.
The Kenya national sevens team Shujaa secured a lucrative sponsorship deal with one of the betting firms in Kenya following the exit of former partners, Kenya Airways.
“Gor Mahia and AFC Leopards, the greatest clubs in Kenya’s history were on the verge of collapsing due to lack sponsorship before they were finally saved by the much improved betting industry locally,” said Gikaria.
Namwamba added: “It is about employment of the youth, sustaining the game and making it more meaningful to the participants. The government, more than any other stakeholder, should be more conscious about this than any other stakeholder.”
House Speaker Justin Muturi had earlier thrown out amendments presented by Majority Leader Aden Duale who sought to set the tax at 35 per cent.
This is after MPs mostly from the Finance Committee objected and accused Duale of failing to involve them as required by the House Standing Orders.