SportPesa faces €120m Kenyan tax showdown

East African betting group SportPesa faces turbulent times in its home market of Kenya, as the Kenyan Revenue Authority (KRA) demands that the company pays back its KSH multi-billion tax arrears.

In 2018, the KRA filed a KSH 10.3 billion (€80m) demand against ‘Pevans East Africa‘ the holding company of SportPesa Kenya, stating that the bookmaker had purposely withheld taxes which should have been accrued from customer winnings during the period of 2015-2018.

In its original demand, the KRA stated that SportPesa had breached Kenya’s Corporate Income Tax Code for failing to deduct a ‘20% withholding tax charge on winnings paid to customers’.

Last week, KRA officials revised their tax demand on SportPesa to Ksh14.9 billion (€128m) adding further interest and penalties. In their update, KRA officials have stated that SportPesa/Pevans has been given 14-days to comply with the tax charge.

Since the start of the dispute, SportPesa governance has maintained its original stance against KRA’s tax charge – underlining that the nation’s Magistrate Court had allowed it a dispensation not to deduct taxes from player winnings, following a customer legal dispute filed in 2014.

In addition, SportPesa maintains that the Kenyan government had ‘frozen’ the tax in 2016 as part of its industry review, with saw the Kenyatta government implement a brief 35% blanket tax charge – which would be rescinded.

Regardless of any settlement with the KRA, SportPesa faces a period of adjustment in Kenya, the firm’s biggest operating market, as the government moves to install tougher gambling restrictions, protecting national consumers.

At the start of May, Liti Wambua Acting Director of Kenya’s Betting Control Board confirmed that as of 30 May the regulator will move to install new gambling/betting advertising restrictions ‘protecting the general public’.

Publishing a brief outline, Kenya’s Betting Control Board confirmed that it would implement a ‘ban on gambling advertising between 6am-to-10pm’. Supporting its new mandate, the Control Board will further ban advertising on social media channels and celebrity endorsements.

Reacting to developments, Kenyan betting stakeholders have responded noting government concerns on ‘protecting consumers’ and improving advertising standards. Nevertheless, the Betting Control Board’s measures have been branded as a ‘vague mandate’ in need of clarification on processes and provisions.

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