Kenya’s uniform 50 percent tax hike has been scrapped on all accounts after legislators voted against it.
Following the announcement betting operators would be exempted from the proposed tax rate – which was then reconsidered – MPs have voted to scrap the crippling revenue charge completely.
Kenya’s National Assembly reconvened this week and among the orders of business was the Finance bill.
The bill, proposed by Kenyan Treasury Secretary Henry Rotich, addressed the 2017-18 budget.
There was an uproar after its release due to the suggestion of a 50 percent uniform tax hike for all betting and gambling operators. This would see up to a 45 percent increase for some gaming sectors.
The bill said the tax would be “set aside for the newly created National Sports, Culture and Arts Fund to support [the] development of sports, culture and arts in Kenya.”
Last week we reported MPs had voted to exempt sports betting companies from the tax hike while other operators would still be subjected to the new 50 percent rate.
However, reports legislators objected to the vote since a quorum wasn’t present voiding the vote followed later in the week. National Assembly Majority Leader, Aden Duale, therefore, initiated another vote.
Following the vote on Tuesday, it was announced the tax rate will remain the same as introduced by the Finance Act, 2016 for all forms of gambling including betting, lottery, gaming and competitions.
Betting operators will have to pay the original 7.5 percent of their revenue, lotteries will pay five percent, and gaming operators will hand in 12 percent of the revenue after paying out winnings.
Competition operators will pay 15 percent of the total gross turnover.
A number of MPs led by Subukia MP, Nelson Ributhi Gaichuhie, rejected the tax hike stating it would hinder the expanding gambling sector. This was after the Association of Gaming Operators Kenya said the tax regime was discouraging to operators and investors interested in the emerging sector.
Supporting these claims were Nakuru East MP, David Gikaria, who is also an official for the Football Kenya Federation, and Budalang’i MP, Ababu Namwamba, who both said sports benefited the most from betting firms. They noted the sponsorship deal between a Kenyan betting firm and the Kenya national sevens team, Shujaa, after Kenya Airways exited.
“Gor Mahia and AFC Leopards, the greatest clubs in Kenya’s history, were on the verge of collapsing due to lack [of] sponsorship before they were finally saved by the much-improved betting industry locally,” Gikaria said.
“It is about [the] employment of the youth, sustaining the game and making it more meaningful to the participants,” Namwamba added.
He said the government “should be more conscious about this than any other stakeholder.”
There were a few who maintained their stance against the gambling sector, they just deemed the tax hike counter-productive.
They called for regulation and as a result, Majority Leader Aden Duale proposed a 35 percent uniform tax rate, instead.
This was rejected by other MPs and thrown out by House Speaker, Justin Muturi.
The debate reportedly did seem to suggest legislators were considering a bill sponsored by Gem MP Jakoyo Midiwo which calls for the Kenya Betting Control and Licensing Authority to regulate betting, lotteries, gaming, and competition operators.
But for now, the move puts the country right back to where it was before the entire thing started, while the Finance Bill without the tax hike awaits presidential assent.