NAIROBI, Kenya, Sep 19 – All types of winnings including lotteries, betting and prize competitions will be subject to 15 percent tax if recommendations by President Uhuru Kenyatta are passed by parliament.
In a memorandum to Parliament, President Kenyatta has said the current definition of winnings as contained in the Betting, lotteries and Gaming Act will limit the tax charged to the net payments of betting only.
The expansion of this tax category to all kind of winnings aims to broaden the tax base to also include promotional winnings and sports prize money.
This might mean promotions run by companies such as Safaricom’s shinda ma mili and Tunukiwa which saw customers win a variety of prizes could be subject to the revised law.
The President has also recommended a revised 15 percent tax on betting and lottery operators from 35 percent that had been passed by parliament.
The amendments are contained in a memorandum President Kenyatta forwarded to the National Assembly after he refused to sign the Finance Bill, 2018, into law.
“In the course of approval of the Finance Bill, 2018, the National Assembly removed other policy measures that had revenue impact. In sum, the Finance Bill, 2018 as currently approved by Parliament has created a funding gap of Sh48.6 billion,” said the President.
MPs had in August rejected a similar attempt by the National Treasury to lower the betting tax, citing that the 35 percent was designed to discourage young people from engaging in betting.
Before the new tax that came to effect in January 1, 2018, betting, was taxed at 7.5 per cent, lottery at 15 per cent and gaming was taxed at 12 percent.
Betting companies have said they are against the taxe increase citing that the business is a costly undertaking.
The increase in taxes saw Pambazuka National Lottery closing shop after 18 months in operation while Sportpesa stopped their Sh600 million local sports sponsorship
However in April 2018, SportPesa announced a return to sponsoring sports in the country, but to only splash their cash on football for a period of three years, dropping their previous associations with rugby, boxing and rallying.
The company announced a combined Sh682mn sponsorship for Gor Mahia and AFC Leopards as well as Football Kenya Federation and the Kenyan Premier League for a period of three years, a much-reduced figure from the initial five-year contracts signed two years ago.
“We have not renewed some of the contracts we had but we decided to choose some of the few we had because the taxation has changed so we need to support the ones we think we can sustain as long as the tax remains as it is,” SportPesa Chief Executive Officer Ronald Karauri announced.
The company gave FKF Sh69.4mn towards the FKF Cup which is now known as the SportPesa Shield while they will also resume their title sponsorship of the Kenyan Premier League for Sh259.7mn over the same period.
Kenya’s gaming tax is currently the highest in the region followed by Uganda at 20 percent, Rwanda 13 percent and Tanzania at 6 percent.
The tax is also higher than for developed countries with some of the big betting firms in Germany paying about 5 percent tax while in Canada bettingf tax is at 20 percent.