Taxes from the 16 betting firms linked to the Kenya Revenue Authority system increased by 23 percent in the five months through March 2023 to Sh5.9 billion, a major boost in the fight against tax evasion in gambling.
Before the integration, KRA says it collected Sh4.8 billion in a similar period in the previous year. The betting revenues represent the collection of excise taxes (7.5 percent of wagered amounts) and withholding taxes (20 percent on winnings).
The KRA integrated its tax system with those of betting firms in mid-November last year. The taxman says the integration is being done in batches through two phases — daily tax remittances and real-time data transmission.
So far, KRA says it has integrated 16 companies in the two phases while 20 companies have been identified for the next batch of integration.
“The first phase on daily remittance on excise duty and withholding tax on winnings commenced in mid-November 2022 after a successful pilot. The second phase involving delivery of real-time data transmission over and above daily payment transmission commenced in January 2023,” KRA told the Business Daily.
Betting firms have been required to file for the pair of tax heads daily with the assessment happening between 7:30am and 8:00am on the next day.
The taxman has not penalised betting firms who have failed to meet the strict reporting at the initial stage but reminds them for disclosures.
“The integration has allowed the visibility of real-time betting transactions. KRA has previously had to wait for over a month to see what the taxpayers would voluntarily self-assess,” Miriam Sila, the KRA chief manager for Domestic Taxes said last week.
Betting firms are now required to pay taxes daily in changes that have seen the KRA access their platform, activate real-time computation in stamping out rogue operatives.
The integration has complemented recent interventions that have seen the migration of traders to a new electronic register register — the Tax Invoice Management System— which captures and sends invoices real-time.
Other interventions to boost revenue collection have been the mapping of rental properties.
KRA says the integration of betting systems has allowed tracking of betting revenues and trends to inform further interventions.
“The integration has made betting and gaming transactions data readily available which facilitates verification of daily remittances by the taxpayers,” KRA added.
The tax agency says it projects a collection of more than Sh3.5 billion from excise and withholding tax on winnings over the next three months to end of financial year.
Beyond excise and withholding taxes on winnings, betting companies incur a betting tax on the gross gaming revenue of a bookmaker at the rate of 15 percent with gross gaming revenue covering turnover less the amount paid out to customers as winnings.
Unlike excise and withholding taxes, betting tax is remitted to KRA on the 20th day of every month.
