New tax system to tame rogue entities welcome


Kenyans staked a record Sh88.5 billion through online bets in the full year to June 2023. FILE PHOTO | POOL

Betting firms will now pay taxes daily by 1am in far-reaching changes that have seen the taxman plug into their platforms to allow real-time computation of taxes to tame rogue entities in the sector.

This is after the Kenya Revenue Authority (KRA) completed a pilot that saw it interlink its tax system with the betting sector to track the 15 percent tax on betting, gaming and lottery as well as the 20 percent withholding tax on winnings collected from punters.

The integration of the systems was one of the reforms under the revenue administration that the government is counting on alongside rental income, to boost collections from two sectors that have been on the radar for not paying their fair share of taxes.

Already, several betting companies have been roped in and this should translate into more revenues.

This is critical at this time when tax collections in the first five months of the current financial year have fallen short of the target by Sh32.2 billion, puncturing President William Ruto’s revenue mobilisation plan to wean off the country from expensive debt to plug budget deficits.

The new tools by KRA are indeed commendable as they reflect a taxman that is adapting to the changing taxpayer.

In addition, this should reduce human contact in tax collection, which increases avenues for corruption where taxpayers collude with rogue KRA staff to under-declare taxes.

The government should also note that such compliance comes at an extra cost since they require more hands in the tax departments.

KRA should also be just as efficient when it comes to tax refunds. It will be unfair to demand taxes on the spot but take years to make refunds.

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Note: The results are not exact but very close to the actual.