NAIROBI, Kenya, January 21- Kenya Revenue Authority (KRA) has revived controversial measures aimed at taxing the earnings of sportspersons that sparked a huge storm in 2012 when they were first mooted by insisting they must pay up.
In a lengthy press statement, the Commissioner of Domestic Taxes insists sportspersons are not exempt from giving Caesar what belongs to him for income accrued meaning they will dig deeper into their pockets to clear outstanding dues as well as paying future earnings.
The latest communiqué issues guidelines to be followed by sportspersons in remitting their dues in conformity to tax regimes in place under the new constitution.
Kenya’s top distance athletes who mint millions competing overseas are set to be the hardest hit by the directives with footballers based abroad among them Southampton star, Victor Wanyama and his elder brother, MacDonald Mariga, who plays in Italy, also affected.
“Where sports income is earned overseas by a sportsperson who is a resident of Kenya for tax purposes, such income is considered to have accrued in or to have been derived from Kenya and is therefore taxable in Kenya.
“However the tax paid overseas is offset against the tax computed locally on the income earned overseas as provided under section 39(2) of the Income Tax Act.
“The sportsperson should however furnish evidence of tax paid overseas in order to be allowed to offset it against tax computed locally,” the statement spelt out.
Touching on monies deducted by agents and or representatives, KRA continued;
“Where the sportspersons use their earnings to pay sports managers and agents who are non-residents, they should deduct withholding tax at the rate of 20 percent of the gross amount payable and pay the balance to the manager or agent.
“Such withholding tax is payable to the Commissioner of Domestic Taxes Department by the 20th of the month following the month of payment. For instance, for payments received in January, should be accounted for by 20th of February.”
One of the issues that torched the uproar against the plans to tax sporting earnings was most athletes invest heavily on real estate and other development projects back at home, sustaining economies of the regions they hail from.
According to them, such measures would amount to double taxation since they pay levies concerning their businesses.
“This is very unfair. We have used much of our earnings to contribute to the Kenyan economy. We bring money home to put up investments, which are already heavily taxed by the government,” the 2011 double world champion and Olympics silver winner, Vivian Cheruiyot, stated in October 2012 when she was among top stars receiving KRA letters asking her to pay up.
“Sportspersons, who invest in any business, including real estate development, must comply with the relevant revenue laws.Like other taxpayers, sports persons who are residents should pay their taxes in four equal instalments, that is, on the 20th of April, June, September and December,” KRA maintain.
“Any balance of tax after payment of instalment tax should be paid by 30th April of the subsequent year. Sportspersons should thereafter file a self assessment return, accounts and tax computation by the 30th of June of the subsequent year to confirm the actual tax liability/refund position.
“The accounts should include the sports persons sporting income and expenditure accounts, business accounts, rent income schedules and P9A (Tax Deduction Card from the Employer), whichever is applicable,” is the taxman’s take on double-taxation concerns.
With many sporting events running countrywide every year, where in the case of athletics, prize money is on offer, organisers have not been spared.
“Local organizers of sporting events are also required to deduct 20 percent withholding tax on any payment made to non-resident sportspersons and sports managers and agents,” the Commissioner stated.
World men 800m record holder, David Rudisha and two-time world marathon champion, Abel Kirui, were among a horde of stars who vehemently opposed the taxman’s plan in 2012.
Some of the affected had bills running into millions in back taxes for their earnings and the measures announced are due to be met by further resistance.