Show me any profitable company that pays 35pc tax and I will buy it – SportPesa CEO

July 7, 2017
Karauri (R) has said few Kenyan corporations will make profits if subjected to an additional 35pc adding the tax is unfair and punitive/FILE

, NAIROBI, Kenya, Jul 7 – Sportpesa is pleading with the national assembly to reverse the 35 percent tax imposed on the industry saying the company risks closing down.

“If you have a business operating in Kenya that can afford to pay 35 percent tax on its gross revenue and remain profitable, show me and I will buy it,” Sportpesa Group CEO Ronald Karauri said Friday.

Sportpesa says that the tax imposed on the industry will cause the company to stop all its sponsorship activities.

This is after the National Assembly approved a bill seeking to charge 35 percent gaming tax on gross revenue and a further 30 percent on corporate tax.

Karauri says the move will in not only kill many businesses in the industry but will leave thousands of people jobless.

“Why would anyone wish to impose tax on revenue? The industry is not big enough to sustain giving a third of its gross earnings before expenses. Every single local player in this industry will be kicked out because it is simply impossible to be operational,” Captain Karauri said.

There will, therefore, be job cuts, the collapse of sports fund and a roll back on sport tourism gains across the industry should the bill be implemented as planned come January 2018.

To take the point home, Sportpesa – which has been shy of disclosing its revenue numbers – conducted a survey to see how such a tax imposition would affect other notable corporations.

One of the country’s most profitable private companies, Safaricom Limited, would suffer a profit dip of 123 percent from FY16’s Sh38 billion to Sh8.9 billion after tax.

“The company would have to pay Sh64 billion in tax to Kenya Revenue Authority, up from the current Sh17 billion. It would also have to cut its costs by laying off staff, reducing innovation, marketing and its CSR budgets.”

Other companies sampled include Kenya Generating Electricity Company (Kengen), whose profit before tax for FY16 was 6.74 billion. The tax would see the government parastatal declare losses worth Sh1.6 billion. A majority of companies sampled would all end up in losses.

“We propose that the national assembly reviews tax and agree on a sustainable regulation,” he said.


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