SBC News Kenya to re-increase controversial gambling rate tax to 20%

Kenya to re-increase controversial gambling rate tax to 20%

The Kenyan betting and gaming sector has encountered a major fiscal hurdle, as the country’s government reimposes a 20% tax on wagering stakes as well as doubling its taxation of foreign tech firms. 

Publishing the 2022 Finance Bill, the Treasury detailed that the 20% tax rate would be reintroduced, just under two years after it was abandoned in 2020 after substantial criticism from the Kenya Betting Control Board (BCLB).

Described by the BCLB and operators active in Kenya at the time as a ‘market killer’, the 20% taxation saw several betting firms depart the country such as Betin and SportsPea – exacerbated by an additional 20% tax on player winnings – although brands such as Betsson’s Betsafe have since found success in the market. 

Kenya’s Treasury Cabinet Undersecretary Ukur Yatani stated his intent last year to reintroduce the 20% tax rate, and the Finance Bill has been submitted to the Departmental Committee on Finance and National Planning after its first reading.

As well as raising the tax on stakes, the Kenyan Revenue Authority (KRA) has proposed to increase digital tax service (DST) to 3% of the gross value of online transactions in the financial year, seeking to take advantage of an increasingly digitised economy. 

The current DST stands at 1.5%, and will increase from July onwards. Although predominantly targeting firms such as Amazon and PayPal, the raise could have an added effect on the betting and gaming industry, due to the impact of revenues of solution, software and payments providers.

Kenyan authorities are targeting increased revenue via the tax rate, with the current 1.5% rate currently projected to generate around Sh13.9 billion by June 2024, with the tax levied on digital content provided by international companies such as music, games, films and e-books. 

Writing in the Finance Bill 2022, Ukur Yatani explained: “The Third Schedule to the Income Tax Act is amended by deleting the expression ‘one-point-five percent’ appearing in paragraph 12 (digital service tax rate) and substituting.”

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