Excise tax on gambling in Kenya would be increased to 20%



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Government officials in Kenya are proposing to reinstate the controversial 20% betting tax rate that prompted sports betting brand Sportpesa to withdraw its operations from the country in 2019. The Finance Bill for 2022 will be the vehicle for implementation of the reform.

Amendments to the Excise Duty Act 2015

On April 12, the National Assembly passed the 2022 finance bill, which was then sent to the departmental finance and national planning commission. The Bill seeks to amend the First Schedule of the Excise Duty Act 2015 which would increase the rate of excise tax on a number of goods and services, including betting, from the current rate from 7.5% to 20%. Excise duty will be raised in the following categories: betting and gaming, contests and lotteries. In addition, the government is proposing a new tax of 15% on fees collected by television, print media, billboards and radio stations for gambling advertisements, which will further negative impact on the gambling industry.

Although Treasury Secretary Ukur Yatani said in his budget speech that the proposed tax hikes are part of a package meant to generate additional revenue of KES 50.4 billion ($433.4 million) , according to Dutch accounting organization Big Four KPMG, the amount is relatively small compared to the overall budget of more than KES 2 trillion ($17.2 billion) and “is indicative of diminishing opportunities to generate revenue additional costs in an economy in turmoil”. In a statement on excise tax increases, KPMG said the government will raise excise taxes on the majority of taxable goods to make up for the revenue shortfall.

A consultation period on the bill has been announced, during which the Treasury will collect evidence from stakeholders until May 4. However, given the position of Yatani, who openly stated that the previous decision to lower the tax rate in order to appease stakeholders should not take place at all, any favorable change is unlikely.

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The lessons of the past have not been learned

Sportpesa decided to withdraw from Kenya in September 2019 following the Kenyan government’s decision to double the 10% excise tax on sports betting to 20%. The company has also canceled active sponsorships with local football clubs and reduced its local workforce following the decision to withdraw from the country. On the recommendation of the parliamentary finance committee, which expressed concern that the higher tax rate was pushing operators out of the market and thus leading to less tax collection, the country abolished the tax from 2020. According to data provided by operators such as Sportpesa, a proposal to restore the tax rate to 20% through the Finance Bill 2021 has been amended by the Finance Committee, which cut the rate to 7.5% in 2021. After officially recovering in the country in 2020, Kenya’s number one sports betting company was forced to shut down by the Betting Control and Licensing Board (BCLB) of the country.

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