MPs move to cut taxes on betting and flour

Members of Parliament have bowed to pressure and proposed the scrapping of taxes on betting and flour after months of campaign by consumers.

The National Assembly’s Finance and National Planning Committee in its review of the Finance Bill 2020 said that the 20 percent excise duty charged on the stake placed by a punter had hurt the local gaming industry "yet the firms continue to operate in other jurisdictions."

The committee added that scrapping of the excise duty will reverse the negative effects of stringent measures that included closure of firms including SportPesa and Betin, leading to loss of jobs for hundreds of Kenyans and loss of billions of shilling in revenue to the taxman.

“The amendment is to remove excise duty on betting. This is to reverse the negative effects of this tax on the industry, which has led to closure of betting firms in Kenya yet international players continue to operate,” the House committee said on Thursday.

The committee also wants the Finance Bill, 2020 amended to move the supply of maize and wheat flour from the exempt category to zero-rated items.

If the bid sails through, the suppliers of maize flour will not be able to pass down additional costs to consumers as they will be able to claim back tax charged on raw materials from the government under the zero-rated regime.

Under the exempt tax regime, the suppliers are not able to claim input costs such as electricity, water and raw materials, which attract VAT but will pass the same to consumers thereby increasing the cost of the products.

“The Bill be amended in clause 11 by deleting paragraph 108. The amendment is intended to make flour cheaper and affordable,” Joseph Limo, who chairs the committee, said in a report on the Finance Bill, 2020 tabled in Parliament last evening.

Punters had last December unsuccessfully sought a nullification of the excise duty through the courts, setting the stage for reduced earnings for every winning bet. Under the Finance Act 2019, KRA further had directed the betting firms to display the same deductions on the punters’ betting slips.

The Act also added a paragraph, which made “winnings” a taxable income at a rate of 20 percent for every winning bet. The amount deducted as duty is then remitted to the Commissioner of Domestic Taxes on or before the 20th day of the following month.

Business lobby group, the Kenya Private Sector Alliance (Kepsa), had last year warned that Kenya would become the first country in the region to impose the charge on a punter’s stake, saying that it would kill the industry and lead to job losses.

The move to scrap the tax on stakes comes nearly a year after firms led by SportPesa and Betin exited the market on grounds of ‘hostile environment’. This was after the Betting Control and Licensing Board (BCLB) - the gaming industry regulator - failed to renew their operating licences over a Sh61 billion tax row hinged on definition of the term ‘winnings’.