Bettors in court to stop taxation on winnings

Four betting enthusiasts have moved to court to challenge a 20 percent excise duty imposed on all stakes placed by punters.

But Justice Weldon Korir declined to suspend the law, which was passed under the Finance Act, 2019.

The judge directed all the parties, including the Attorney General, Cabinet Secretary for Finance and Kenya Revenue Authority (KRA) to file their responses and submissions ahead of the hearing on March 20, 2020.

Lawyer Dennis Mare told the judge that KRA has already notified licensed bookmakers of its intention to implement the Act by directing the firms to deduct or charge an excise duty at the rate of 20 percent on all stakes placed with them.

The duty should then be remitted to the Commissioner of Domestic Taxes on or before the 20th day of the following month.

The four—Eugene Mwanje, Robert Opana, Dennis Kimari and Moses Muiruri accused the National Assembly of unilaterally increasing the excise duty on stakes placed by the punters from 10 percent to 20 percent without public participation.

The amendments contained in the Finance Act 2019, added a paragraph, which made “winnings” a taxable income. It also introduced an excise duty of 20 percent on the stakes placed by punters.

The winnings are understood to be the gross payout given to the punter by the bookmaker. This entails the stake placed by the punter at the time of betting.

However, the four fault MPs saying that President Uhuru Kenyatta refused to assent to initial Bill, citing his reservations over the capping of interest rates.

The initial proposal had placed the excise duty on betting at 10 percent. But the MPs “unilaterally and without involving the public or stakeholders increased the tax base to twenty percent”.

“The amendments place the burden on the punter to pay both withholding tax at a rate of 20 percent under the Income Tax Act, and Excise Duty of 20 percent under the Excise Duty Act on the stakes placed by the punters leading to double taxation,” Mr Mare said.

He said the actions of the National Assembly meant that they took over the function of the national government, which is mandated by the constitution to impose excise duty.

Mr Mwanje said in an affidavit that with the passage of the Act, a punter who places a bet of Sh100 will only gain Sh28. “This is unreasonable,” he said.