Blindsided? Kenya Was About to Move on From Heavy Taxation

Published July 16, 2020 by Lee R

Blindsided? Kenya Was About to Move on From Heavy Taxation

A new opponent of the morality of gambling appears to be constricting the market once again.

An unsightly tax on the Kenya ledger is rearing its head again, after most had waved it off for good.

The Tax Returns

The tariff is a 20% excise tax on betting stakes, now coming back to casinos in Kenya with Secretary of Treasury Ukur Yatani’s announcing it’s return after it was just removed from the country’s 2020 budget mere days ago.

The Tax, Almost Gone

When President Uhuru Kenyatta signed into law the country’s new Finance Bill setting out Kenya’s budget for the coming year not a week ago, he confirmed the removal of the tax, to the quiet joy of operators.

Original Controversy

Major local players such as Sportpesa and Betin had already been driven away by prospects of the tax rising to 20% of stakes from its original 10% in 2019--as included in the original 2020 budget.

Tax Break?

The tax was abandoned at the committee stage due to some pragmatism on the part of lawmakers, who were concerned that the tax stood to significantly reduce tax revenue and drive players to offshore sites.

Before the collective sigh of relief could be fully exhaled, Yatani confirmed that the reintroduction of the proposal to the country’s National Assembly “within the next six months.”

Treasurer Faces the Press

Yatani further faced down media claims of the government reneging on presentation of a workable taxation and regulation model by attacking the morality of gambling:

“Betting activities in the country have adversely affected the social fabric of our society, particularly the youth,” with Yatani claiming his organization was seeking to “reiterate the commitment of the Government on taxation of this industry so as to contain such vices.”

Previous Taxes Upheld

As for potential resistance, Yatani pointed out previous examples of the 15% revenue tax for operators in 2018 and the 20% withholding tax on winnings, both of which were upheld by an appeals court in 2019 as specifically applicable to Kenya players.

Higher Up Historical Resistance

While Yatani was the one who came out firing, it is well-known that President Kenyatta has expressed moral concerns about gambling in the past, going so far last August as to call on his government to deliver a total ban on gambling in the country.

Outlook

So does a surprise on the surface start to look more like a return to the status quo in Kenya.

 

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