The gaming industry is set to benefit from the Members of Parliament’s amendment of the Finance Bill, which could see the tax on betting and gaming reduce by 20 percent.
A statement from the report on the amendment of the Finance Bill 2018 hints that the decision to lower the tax from the current 35 percent was to ensure the contributions made by the gaming industry are preserved.
According to the committee on Finance and National planning, Section 29A of the Betting, Lotteries and Gaming Act is will feature a modified subsection 1 that deletes the expression 35 percent and substituting, therefore, the expression 15 percent.
The current tax rate has been in operation since January 1. The Association of Gaming Operators Kenya (AGOK) welcomed the idea saying the tax reduction will facilitate survival of the industry. They argued that the betting companies get a gross margin of 7 percent, which is reduced to 4.5 percent after the 35 percent tax.
These firms also contribute 30 percent corporate tax and are committed to giving out 25 percent of their sales to sports sponsorship and other social causes as is legally mandated.
The new consideration by the MPs also reduces the amount of contribution made by these companies to social causes and charity. The new value will drop from 25 percent to at least 5 percent if the proposal is adopted.
The gaming industry has been pressuring the government to amend the unrealistic taxation. Initially, lotteries, sports, casinos, and price competition paid 5, 7.5, 12, and 15 percent respectively.
The importance of these industries can be conspicuously illustrated through how they support several causes. The Boxing Association of Kenya noted that these industries minimized their support when the taxes were elevated.
In fact, the sports firm Sportpesa after the tax raise withdrew the support for local sports sponsorship. It sponsored AFC Leopards, Gor Mahia, and Nakuru All-Stars as well as the Kenya Premier League and Football Kenya Federation.
Earlier in 2018, AGOK stated that the gaming industries would relocate to neighboring countries should the exorbitant tax review wasn’t conducted. The association noted that more than 10,000 jobs were at stake if the firms closed. Nevertheless, they noted that they would consider the withdrawal of the sponsorship if the taxes were lowered.