Treasury exempts horse racing from steep betting taxes


Silverstone Air Kenya derby riders take part at the Ngong Racecourse in Nairobi. PHOTO | DENNIS ONSONGO | NMG

Betting activities relating to horse racing will not be subjected to tax as the government moved to shield the exclusive sport from the impact of the new excise duty.

The Finance Act, 2022 has exempted horse racing from excise duty imposed on betting, gaming and lotteries.

Currently, gamblers face a 7.5 percent excise duty on any amount they set aside in their wallets for betting and gaming.

The Finance Act, which took effect on July 1, exempts horse racing from being subjected to the 7.5 percent excise duty on the amount wagered or staked.

“Amend section 4A part II of the first scheduled of the Excise Duty Act, 2015 by inserting a new provision…provided that this paragraph shall not apply shall not apply to horse racing,” the Act states.

In submissions to the National Assembly’s Finance committee during the scrutiny of the Finance Bill, 2022, Mr Yatani said the changes to the Excise Duty Act, 2015 seek to remove horse racing from the betting tax.

“This is meant to promote horse racing activities in the country and thus contribute to job creation as well as nurture this nascent sport,” Treasury Cabinet Secretary Ukur Yatani who proposed the changes said.

Football attracts the highest number of gamblers in Kenya followed by horse racing. Ngong Racecourse, operated by the Jockey Club of Kenya, is one of only four racecourses in Africa.

The Ngong Recourse, the only one in East Africa, hosts its biggest race, the annual Kenya Derby.

Mr Yatani failed in his bid to raise excise duty on betting from 7.5 percent to 20 percent in efforts aimed at curbing the practice that has become a national pastime.

“The proposal to increase excise duty on betting will encourage people to bet in offshore companies and thus not achieve the intended purpose,” the Finance committee said in its report.

The MPs said excise duty on batting and gaming activities had been increased in the Finance Act, 2021 and therefore the need to give the sector time before taxes are increased.

Betting firms and punters lost their bid to quash a 7.5 percent excise duty after the High Court dismissed their petition seeking to overturn the tax.

Justice George Odunga ruled that levying excise duty on stakes is proper and lawful.

The judge further dismissed claims by the petitioners that imposing the excise duty amounts to double taxation since they pay 20 percent withholding tax on winnings and a further 15 percent tax on the gross gaming revenue.

The tax compels betting firms to withhold and forward Sh75 out of every Sh1,000 wagered regardless of whether the punter wins or loses.

The gamblers, who filed the suit, claimed the introduction of the extra tax of 7.5 percent on top of the 20 percent tax imposed on all winnings amounted to double taxation.

Justice Odunga, however, said excise duty is a different levy from withholding tax.

The betting firms, including Betika, Betway, Odibets, Sportpesa, MozzartBet and Association of Gaming Operators, were enjoined in the suit against the Kenya Revenue Authority (KRA) and Parliament.

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