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The government was forced to take the action after the firms refused to pay withholding tax on the winning as required by law/COURTESY

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Taxman eyes Sh61b from suspended betting firms

The government was forced to take the action after the firms refused to pay withholding tax on the winning as required by law/COURTESY

NAIROBI, Kenya, Jul 31- The Kenya Revenue Authority on Wednesday said it aims to recover Sh61 billion in taxes from 27 betting and gaming companies whose licences have been suspended for allegedly not being tax compliant.

Deputy Commissioner Elizabeth Meyo says the government was forced to take the action after the firms refused to pay withholding tax on the winning as required by law.

She stated that some of the firms had refused to comply due to a dispute on the interpretation of the amendment to the finance act on whether they should be taxing winnings or the bets.

“we have did a risk assessment, we are seeing a total of Sh61 billion and the reason we raised the assessment is because we are trying to protect our revenue. This country needs revenue; so we invoked Section 33 of the Tax Procedure Act such that the funds are preserved,” the KRA Deputy Commissioner told a sitting of the Senate Justice and Legal Affairs Committee over the halting of licenses and permits of betting and gaming firms

KRA says majority of the companies have already paid the amount required while others have engaged the agency in a payment scheme.

“KRA cannot sit back, wait and come back to Parliament and say, the sector willful refused to comply with the provision of the law.”

“The main contentious issue is the interpretation of what a winning is, if the law was changed in 2017 to say that a winning should not be, winning less stake, it cannot be changed later to mean the same thing, because when you look at the Tax Laws (Amendment) Act 2017, winnings meant winnings less stake,” Meyo said in her explanation.

All betting firms were supposed to be vetted afresh and have their licences renewed by July 1 in a bid to control the growing influx of the companies and ensure strict remittance of taxes.

Association of Gaming Operators chairman Ronald Karauri explained that the taxman was using a loophole in the amended Finance Act 2018 to demand winnings, a dispute that is before Taxation Dispute Tribunal.

“We have paid taxes in the amount of Sh17.1 billion since we began operating in Kenya, but KRA are demanding that we now have a debt of over Sh21 billion. Our prayer to this Committee is that it rules that we be allowed to resume our operations, because we cannot get into negotiations when we are out of business.”

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“There has to be a level of good faith. Unfortunately when we try negotiate with the KRA, they tell you pay first argue later,” said Karauri who is also the Sportpesa CEO

All betting firms were supposed to be vetted afresh and have their licences renewed by July 1 in a bid to control the growing influx of the companies and ensure strict remittance of taxes.

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