50pc tax will drive us out of business, say betting firms

The Association of Gaming Operators has called for the withdrawal of the proposed 50 per cent turnover tax on gaming, betting and lottery.

Chairman Ronald Karauri warned the tax would bring the gaming industry to its knees.

Speaking at PrideInn Beach Resort in Mombasa on Monday during a public participation meeting organised by the Parliamentary Committee on Finance, Planning and Trade, wondered why the government raised the tax yet levies on betting were only introduced January this year.

Mr Karauri said under the previous tax the government charges five per cent tax on lottery, 7.5 per cent on betting, 12 per cent for gaming and 15 per cent for prize competition tax.

Apart from tax, players in the gaming industry, he added, have to pay 30 per cent corporate tax.

He said that if the 50 per cent proposed tax went through, the country’s gaming industry would the highest taxed in the world.

South Africa charges 9.6 per cent of gross gaming revenue, Canada an average of 20 per cent and the United Kingdom 15 per cent.

READ: Rotich proposes punitive betting tax hike to 50pc

In the East African region, he added, Tanzania charges gaming 15 per cent of gross revenue, Rwanda 13 per cent while Uganda plans to soon reduce the tax from the current 35 per cent to 20 per cent.

Mr Karauri said last year the Kenya Revenue Authority (KRA) collected corporate tax of Sh4.7 billion from the gaming industry.

“The proposed 50 per cent tax will wipe out the gaming industry. In the end, KRA will lose billions of shillings of revenue when the gaming operators close shop,” he warned.

Apart from the huge revenue loss, he said the closure of formal gaming operators will create a market for illegal operators who don’t pay tax to the government.