The Kenyan government has proposed a 50 percent tax increase which is likely to anger betting and gaming operators.
Kenya’s Treasury Secretary, Henry Rotich, released 2017-18 budget proposal on Thursday which included the hefty tax on all gambling revenue.
At the time of writing, betting operators only pay 7.5 per cent, gaming operators pay 12 per cent, competitions pay 15 per cent and lotteries pay five per cent tax.
The move will be the biggest tax change in Kenya’s history.
Rotich argued the increase was reasonable since gambling has “become widespread in our society in an environment that is inadequately regulated.”
“Its expansion is beginning to have negative social effects particularly on the youths and vulnerable members of our society,” he said.
Rodich said the government will use the funds generated to create a new National Sports, Culture and Arts Fund.
The Kenya Revenue Authority (KRA) collected Sh4.7 billion in betting taxes between the 2014-15 and 2015-16 fiscal years and it expects to collect Sh3.4 billion in 2016-17 due to the industry’s expansion.
Before Rotich released the proposed budget, he said he expected Kenya’s taxman to generate an additional Sh188.5 billion in revenue in 2017-18 and now it is clear he thinks it should come from gambling operators.
But the taxman has warned increasing the tax on betting and gaming firms could force them to relocate internationally. Kenya already has the highest tax rate out of Ghana, Uganda, Tanzania, and Rwanda.
Gambling operators have not yet commented on the budget proposal but when they do, it won’t be pretty.
When MP Jakoyo Midiwo’s proposed the Betting, Lotteries and Gaming Amendment bill 2016, which raised the tax to 20 per cent it was shot down by gambling operators.
Midiwo commented on the budget suggesting it was too high and asked: “Who will you raise the tax from if you don’t raise it from them?”
Midiwo also said “a good government cannot be in the business of driving other businesses out of business.”
The MP said he was pushing for new gambling legislation to reduce the number of illegal slot machines which are run by Chinese nationals.
“There are too many people betting illegally,” he said.
“The Chinese slot machines are the problem. How I wish the government would outlaw them.”
Kenya operates Africa’s third biggest gambling market and features national betting operators which have land-based shops in the country. International betting sites also accept Kenyan players.