Kenyan lawmakers may finally agree to reduce the 35% tax on betting and gaming that took effect early this year to 15% as the nation’s gambling industry is growing restless over the toll the new taxation regime has taken on its stakeholders.
Kenyan news outlet The Star reported earlier today that the country’s government is considering the addition of amendments to the Betting, Lotteries, and Gaming Act, with those amendments now being discussed as part of the Finance Bill 2018. Ongoing debates on the matter suggest that the current 35% gambling tax rate might be replaced with a 15% one, if the proposal gains traction in the Kenyan Parliament.
The tax raise on gambling and betting services provided in the country was approved last year a part of the Finance Bill 2017. Kenyan President Uhuru Kenyatta signed the bill into law last June. The new tax rate took effect on January 1, 2018, creating a wave of discontent among those whose operations were affected by the new regime.
Aside from the 35% tax on their revenues from local customers, companies that are licensed to operate in Kenya are also paying a 30% corporate tax and are required to contribute 25% of their sales to different social causes, including sports sponsorships.
It emerged earlier today that Kenyan MPs are discussing the possibility to cut the social causes share to 5% under the Finance Bill 2018.
Industry’s Response to the Tax Hike
The implementation of the 35% tax rate effectively made Kenya the most expensive African country to operate a gambling business in. Prior to the new regime, different types of gambling services were taxed at different rates. Lottery operators thus had to pay a 5% tax, sports betting was taxed at 7.5% on revenue, and casinos had to pay a 12% tax. If the proposed amendments to the country’s gambling law gain the necessary support in the Parliament, all gambling services will be taxed a 15% rate.
The increased betting tax caused quite the commotion in Kenya’s gambling sector. And among other things, many gambling operators withdrew their sponsorship of various sports teams and sports leagues.
SportPesa, known to be the one of the nation’s largest online betting operator, was among the first to drop its sponsorship deals in the wake of the new gambling tax. The company had been the official shirt sponsor for a number of football clubs in the country. Under a deal with Nairobi-based Gor Mahia F.C., the company had promised to dedicate KES200 million over a period of five years.
The company had also been the main sponsor of the Kenyan Premier League, the Kenya Boxing League, and the Kenya Rugby Union, among others. It nixed all of the above sponsorship agreements, protesting the new regime. However, SportPesa and its likes have pointed out that they are ready to reconsider their ties with the nation’s sports leagues if a more reasonable tax rate is introduced.
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