The National Treasury is seeking to reintroduce a 20 percent tax on the amount staked by gamers on betting firms, a move that will see giants in the sector remit billions of shillings to the government annually.
The move to reintroduce the 20 percent tax is likely to awaken the conflict between the government and betting first that led to giants such as SportPesa and Betika shut down operations in protest complaining of the high cost of doing business in Kenya.
The tax was introduced in 2019 but was removed in July last year through amendments to the Finance Act 2020 following lobbying by betting firms. The firms said they were paying the normal taxes and hitting them with 20 percent was unfair.
Treasury Cabinet Secretary Ukur Yatani initially vowed to bring back the tax within six months. He was angry at the legislators for removing the requirement in the Bill saying the tax was inevitable and that it must be reintroduced.
If enacted into law, the Kenya Revenue Authority (KRA) will take 20 shillings out of every 100 shillings wagered regardless of whether the person wins or losses. The move will expand the list of taxes levied on the betting industry and gamers.
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Betting firms are currently required to withhold 20 percent of winnings and remit the same to the taxman. This means that if one wins 10,000 shillings, he or she will receive 8,000 shillings as the KRA takes 2,000 shillings.
It is estimated that at least 75 percent of Kenyan youth from the age of 18 bet with between 100 and 1000 shillings daily. This means the government has done its math and looking to milk billions out of Kenyans and not betting firms.
Will some firms close shop again?