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Economy

Treasury vows to revive betting tax

A betting spot in Nairobi.
A betting spot in Nairobi. Betting gained prevalence in Kenya, which saw the industry expand on the back of mobile payments and digital applications, creating a multibillion industry. FILE PHOTO | NMG 

The government will bring back excise tax on betting companies in the next six months after a public outcry over scrapping of the 20 percent duty in the Finance Bill 2020.

Treasury Cabinet Secretary Ukur Yatani blamed the Parliament, saying the industry has been lobbying the government for the removal of the taxes.

“The players in the industry have been petitioning the government to reduce taxation in the industry,” said Mr Yatani.

“The removal of this tax happened during the committee stage of the bill...The National Treasury will be proposing to the National Assembly the re-introduction of the excise duty on betting within the next six months.”

The Joseph Limo-chaired Departmental Committee on Finance and National Planning introduced the clause to scrap duty on betting after an obscure stakeholder group — identified only by a non-existent website shade.co.ke made the proposals on May 15.

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The committee justified the reversal saying the taxes hurt the industry, which has led to the closure of betting companies in Kenya, yet international players continue to operate

Betting gained prevalence in Kenya, which saw the industry expand on the back of mobile payments and digital applications, creating a multibillion industry.

HOSTILE ENVIRONMENT

The leading sports betting firm SportPesa Global Holdings made a profit after tax of almost Sh1.6 billion in 2018, according to its financial statements.

In 2018, the National Treasury introduced a 15 percent tax on betting companies and 20 percent withholding tax on all winnings.

Last year, the government again slapped the industry with additional taxes, introducing a 20 percent excise duty charge on any amount staked.

This saw the government and the betting industry face off in a move that led to SportPesa losing its betting licence last July before it withdrew from Kenya last September in response to what it called “the hostile taxation and operating environment in the country”.

Their withdrawal resulted in 400 job losses and cancellation of its local sports sponsorships.

The scrapping of the excise duty tax has coincided with restructuring of ownership at SportsPesa raising speculation the company is about to return.

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