Experts fault Rotich’s 50pc tax on gambling

A football fan on an online sports betting site. FILE PHOTO | SALATON NJAU    

By MUTHOKI MUMO

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Summary

• PwC analysts argue that a levy on the gambling revenues might not have the intended impact on the average gambler.
• Terming the proposed tax “unfair”, PwC said that it has the potential to stifle an industry that is still in its nascent stages.
• Betting, lottery, gaming and prize competitions are currently taxed at a rate of 7.5 per cent, 5 per cent, 12 per cent and 15 per cent respectively

Tax analysts at PwC have said that the proposed gambling taxes are punitive and unlikely to deter Kenyans.

Finance minister Henry Rotich has proposed a 50 per cent tax on gaming, lottery, betting and companies running prize competitions.

Revenue collected from this tax will feed the National Sports, Culture and Arts Fund.

Mr Rotich has argued that the sector is unregulated and that gambling was an emerging vice in Kenya.

READ: Rotich raids gamblers, hard liquor consumers

However, tax analysts at PricewaterhouseCoopers (PwC) that a levy on the gambling revenues might not have the intended impact on the average gambler.

“The tax is on the companies. The tax is not on Kenyans who are playing the game. If this was an attempt by the government to try and stop Kenyans from gambling and betting, I don’t think it’s going to work,” said Mr Steve Okello, PwC Kenya’s tax services leader.

He added that the government ought to find alternative ways of ensuring that the betting sector is well-regulated.

Terming the proposed tax “unfair”, PwC said that it has the potential to stifle an industry that is still in its nascent stages.

Betting, lottery, gaming and prize competitions are currently taxed at a rate of 7.5 per cent, 5 per cent, 12 per cent and 15 per cent respectively.

Drive gaming underground

The Kenya Revenue Authority (KRA) in February warned that more punitive tax measures could drive gaming activities underground.

At the time, KRA revealed that eight betting companies had paid a total of Sh4.7 billion in taxes over the last three years.

There are also concerns that the proposed tax, as outlined by Rotich, remains unclear. Analysts at KPMG pointed out that there is confusion whether the 50 per cent tax will be levied in addition to the normal corporation tax of 30 per cent.