Business Daily Africa has reported that the Kenyan Revenue Authority (KRA) has placed a demand for a minimum KSH 10.3 billion (€80m) on market-leading bookmaker SportPesa, attached to backdated taxes spanning a period of three-years.
The KRA tax charge has been filed against SportPesa’s private entity ‘Pevans East Africa’, stating that the betting group had withheld taxes that should have been accrued from player winnings for the period of 2015-2018.
In its demand, the KRA states that Sportpesa has breached provisions of Kenya’s Corporate Income Tax Act for ‘failing to deduct withholding tax on betting winnings paid to customers’.
Court filings detail that the KRA tax assessment covered the period of 2015-to-2016, in which SportPesa distributed KSH 80 billion (€700m) in player winnings, a figure that should have amassed KSH 7.6 billion (€66m) for the Kenyan tax authority.
In addition, the KRA has enforced penalties of KSH 1.5 billion, on top of an interest charge of KSH 1.1 billion sanctioned in 2018.
Defending its position, SportPesa governance states that as a licensed gambling operator it had been instructed by Kenya’s Magistrate Court not to deduct taxes from player winnings, following a customer dispute placed in 2014.
The betting group states that it’s auditing on player winnings was simply following the demands of the court ruling which had been approved by the Kenyan government.
Disputing the bookmaker’s defence, the KRA states that as national tax authority it was never informed of the SportPesa tax arrangement and that any special dispensation should have been formally approved by its governing body.
“That the applicant has now been put in the unenviable position where it must either disobey a court order with the risk of punishment for contempt of court or obey the order and risk being required to pay huge amounts representing the taxes covered by the court order together with debilitating interest and penalties,” said SportPesa CEO Ronald Karauri in the firm’s court filings.