BY HENRY MARETE – Gamblers were dealt yet another body blow, Thursday (August 8th 2019), when the few betting firms still licensed to operate started levying, and withholding, a 20% tax on possible winnings in line with fresh directives from the Kenya Revenue Authority (KRA) and the Betting Control and Licensing Board (BCLB).
In a notification to customers, one of the firms, Betika regretted that it would start withholding a fifth of the money that any bet placed was likely to win for onward remittance to KRA pending determination of a tax appeals to tribunal case lodged by the industry to determine what exactly constitutes ‘winnings’
“This means your payout must be less by 20%, as it has become infeasible to deduct on your behalf. Kindly bear with us as we continue to seek a legal definition of winnings”, the statement from Betika concluded.
Essentially, what this amounts to is that should you place a bet of Ksh. 1,000 on an event such a football match whose odd (probability of winning) is 1.50, and the actual outcome of the match tallies your prediction, the firm will pay you only Ksh. 1,200, which is 80% of the Ksh. 1,500 you would otherwise have won.
The KRA directive was issued despite an April court order that barred betting firms from deducting and remitting the money to KRA until a case filed by one their customers challenging the taxation policy that was first introduced in the 2018/19 budget, is heard and determined.
“KRA taxes the winnings of punters (people who place bets) when they wage successful bets. It is important to note that placing of bets is a form of entertainment and does not lead to generation of income”, KRA said in the statement.
The Government and the betting industry are currently engaged in battles in and out of court over tax policies and licensing requirements. Early last month, the ministry of interior ordered mobile money service providers to shut down paybill numbers operated by majority of the firms including market leader Sportpesa, which is heavily involved in sports sponsorship across the country and beyond.
The KRA directive on levying the 20% tax on winnings comes ahead of the opening weekend of the new English Premier League season, which is very popular among Kenyan gamers.