Kenya’s betting and gambling operators are likely to face a tax hike after legislators agreed with the President’s proposal.
On the final day of the legislative session, the country’s legislators met to discuss the recommendation by Kenya’s President, Uhuru Kenyatta.
Earlier this month, lawmakers deleted a clause which would have seen a tax increase to a uniform 50 percent for gambling and betting operators – an increase from as little as five percent for some operators – from the Finance Bill 2017.
The President rejected the bill when it was sent to him for his approval since he believes the clause is essential to aid the redevelopment of the country’s economy and to prevent the vulnerable from the gaming activity.
As a result, President Kenyatta recommended a uniform tax hike of 35 percent when he returned the unsigned bill which will be an increase from 7.5 percent for betting companies licensed in Kenya.
The bill was sent back to the National Assembly for a review of the recommendation, with lawmakers eligible to ignore the new tax rate.
The Assembly was not interested in leaving the bill for the next legislative session and lawmakers were keen to address the President’s recommendation.
Although the official vote is yet to be published on the National Assembly website, Kenyan media outlet, CitizenTV, has revealed the House Finance Committee, led by Ainamoi MP Benjamin Langat, approved the proposal.
Reportedly, the National Assembly Deputy Speaker, Joyce Laboso, had given the House until last Friday to table the report before a legislative recess.
As a result, all sports betting, gambling, lottery and competition operators licensed in Kenya will face a 35 percent tax rate.
While the tax increase is not as significant as the initial 50 percent uniform tax hike, as suggested by Treasury Secretary, Henry Rotich, it will still disrupt operators who were all paying under 20 percent in tax revenue on gambling revenue.
Kenya’s gambling market is considered to be highly regulated in comparison with other African markets. Additionally, locally licensed betting operators such as SportsPesa, support Kenyan sporting codes via sponsorships.
When the 50 percent tax hike was proposed the CEO of the Kenyan Premier League (KPL) revealed the hit it would take if betting companies, such as SportsPesa, have to cut their ties due to costs.
But President Kenyatta held on to Rotich’s tax suggestion as he believes children were getting involved with gambling and the industry needed to be improved.
It is not clear how betting and gambling operators will respond to the new tax regime. They were relieved when the initial tax hike was dismissed after Sportspesa’s parent company even mounted a legal challenge.
Analysts have pointed out Kenyan-licensed gambling operators already pay 30 percent corporation tax. Combine this with the revenue tax and it’s unlikely the betting operators will survive against offshore online bookmakers who can accept Kenyans and avoid paying the hefty tax.
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