– Treasury in 2018 introduced 20% tax on winnings and this made them clash with betting companies
– The exchequer changed the definition of winnings to mean the gross amount a punter walks away with after a lucky bet
– Earlier, winnings were defined as the positive difference between the payout made and stakes placed in a given month, for each player
– The tax dispute led to betting giant Sportpesa to file a suit in the High Court and the case was referred to a Tax Tribunal
– Sportpesa and Betin closed shop in the country following the protracted tax dispute with KRA
Kenya Revenue Authority (KRA) has been dealt a blow after the Tax Appeals Tribunal ruled that the authority can not levy the 20% tax on a bettor’s stake.
The decision made on Thursday, November 7, follows a case where Sportpesa moved to the high court and sued KRA for what it termed as excessive taxation.
According to the ruling, the taxman is only supposed to tax the positive difference between the gamer’s stake and winnings within a month but not gross earnings.
The suit by the betting giant had enjoined Betin which together with Sportpesa shut down operations in the country after the tax dispute deepened.
Trouble between KRA and betting firms started brewing in 2018 when National Treasury introduced the 20% tax on winnings.
What left a bitter taste in the mouths of investors in the betting sector was the amendment of the definition of winnings to be the sum of stake and what the punter gets on top of the stake.
The amendments took effect on July 1, 2018.
Between May 2014 and March 2019, KRA has been demanding to a tune of KSh 61 billion from betting firms.
On the other hand, the taxman has also been hunting for KSh 8.59 billion tax arrears for Betin and Sportpesa from Safaricom.
Betting firms use the telco’s services to facilitate deposits, withdrawals and other forms of communication with gamers.