Economy

Gamblers lose taxation battle

case3

Summary

  • The gamblers said the government, through the Finance Act 2021, has introduced an extra tax of 7.5 percent on top of of the 20 percent tax imposed on all winnings.

Gamblers have lost bid to suspend implementation of the government's decision to introduce additional taxes on all transactions conducted through online betting sites.

The gamblers said the government, through the Finance Act 2021, has introduced an extra tax of 7.5 percent on top of of the 20 percent tax imposed on all winnings.

While decsribing the taxes as excessive, the gamblers urged court to stop the Kenya Revenue Authourity (KRA) from enforcing a provision in the Excise Duty Act introduced by the Finance Act, 2021 by collecting or demanding payment of the new taxes imposed on transactions conducted by online punters.

They argued that the enforcement of the disputed law risks killing the betting industry in Kenya and the livelihoods of millions because punters are being taxed on every step and on the entire value of transaction when placing bets.

But Justice George Odunga declined the request saying that while the implementation of the legislation may have ripple effects on how the betting industry operates, it has not been contended that the said implementation has the immediate effect of leading to closure of business.

He also found that the gamblers do not dispute the fact that whatever payment shall have been made pursuant to the said legislation can be recovered however tedious the process might be.

"It has been contended which is not disputed that some of the online betting sites are already complying with the provisions (of the disputed law) which are being challenged by the gamblers," said Justice Odunga.

That being the case, he said, it is his view that public interest militates against the suspension of the disputed provisions since at the end of the day, should the gamblers succeed, KRA may be directed to refund whatever shall have been collected.

On the other hand, the KRA stated that should the petition fail, it would not be able to recover the lost taxes.

In their application, the gamblers argued that if the disputed law is not suspended, then they will suffer untold prejudice because their gross wagered amounts will be subjected to an excessive, discriminative and illegal tax.

They told the court that they engage in gaming as a source of entertainment and earning upon which they support themselves and their family and dependents.

They said under the new law law, all transactions by punters have been subjected to excise duty on the mobile phone money transfer charges payable to the government as specified in the Part II (Excisable Services) of the First Schedule to the Excise Duty Act.

The court heard that punters are not sellers of any category of specified goods or services in the gaming sector but investors who stake bets on online platforms provided by the betting companies.