NAIROBI, Kenya Jul 31 – Betting firm Sportpesa says it will continue sponsoring sporting ventures in the country despite the failure by Government to renew their license for allegedly not being tax compliant.
CEO Ronald Karauri sought to allay fears raised by Kakamega Senator Cleophas Malala that the cancellation of the betting firm’s operating licence has thrown the Kenya Premier League into panic of losing their title sponsor.
“In terms of sponsorship, I am a lover of sports, I will continues sponsoring Gor Mahia and AFC for as long as I am able,” Karauri on Wednesday afternoon told a sitting of the Senate Justice and Legal Affairs Committee which was meeting over the halting of licenses and permits of betting and gaming firms
The Kakamega Senator said supporters of the two community based football giants were living in fear of the repeat of a decision by Sportpesa which in January 2018 shocked the sporting fraternity by announcing the cancellation all its local partnerships citing a tax hike.
The gaming firm is one of the biggest supporters of local sports, bankrolling the Kenyan Premier League as the title sponsor to a tune of Sh87mn a year as well as both Gor and AFC, Kenya’s two biggest football clubs.
SportPesa also sponsors the Football Kenya Federation Shield as well as boxing and rallying to add on to their Kits for Africa Community Social Responsibility program.
Senate Minority Leader James Orengo (Siaya) said it was unfortunate that the betting firm was being targeted because of its flamboyant portfolio which has seen its sponsoring English Premiership side Everton, Championship side Hull City as well as U.K. based Formula 1 Team Racing Point.
SportPesa also has sponsorship ventures in Italy and is also Arsenal and La Liga’s Africa betting partner.
Senators Mutula Kilonzo (Makueni) and Susan Kihika (Nakuru) defended the betting firm saying the government went back on a court order that had allowed the company to continue operating as it resolved differences on tax issues.
“I refuse a country where law is used to suffocate honest business while fraudsters in this country are making money and walking away,” said Kilonzo.
“The Ministry of Interior should try institute morality through legislation and not fear-mongering. They should better than to use this to confuse Kenyans and shut companies while leaving others running. I need to know what the distinction was between those whose licenses were renewed and those whose licenses were shut down. Do we have selective enforcement going?” posed the Makueni Senator.
During the meeting Kenya Revenue Authority Deputy Commissioner Elizabeth Meyo assured the Senate team that they have entered into talks with Sportpesa and 26 other betting and gaming firms whose licences have not been renewed because they had not complied with the new 20pc withholding tax on winnings.
However, 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 Sh17.1bn since we began operating in Kenya, but KRA are demanding that we now have a debt of over Sh21bn. 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,” Karauri argued.
He further stated; “There has to be a level of good faith. Unfortunately when we try negotiate with KRA, they tell you pay first argue later.”
But Meyo responded that they were forced to take the action after the firms refused to remit the taxation of the earned through the gross revenue declared through winnings.
“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.