Kenya Softens Proposed Gambling Tax Increase

June 20, 2023
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Kenya’s latest budget statement says that the excise duty for gambling products, including lotteries, is set to increase to 12.5 percent.

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Kenya’s latest budget statement says that the excise duty for gambling products, including lotteries, is set to increase to 12.5 percent.

Initially, the country's Finance Bill 2023 proposed to increase the excise duty to 20 percent.

The latest version of the bill entered its second reading in the National Assembly House on June 15. Its proposed changes have not yet been finalised and are being debated.

Speaking during a debate on the bill last week, the chairperson of the Departmental Committee on Finance and National Planning, Kuria Kimani, said Kenya is “falling behind in terms of tax revenue collection … in comparison to other comparable African countries’ tax revenue as a percentage of Gross Domestic Product (GDP), like Botswana’s 24 percent, Mauritius’ 18 percent and Zambia’s 17 percent,” he said, while adding that Kenya was at 13 percent in 2021.

“These countries have managed to achieve higher tax revenue collection rates. This disparity highlights the need for us to reassess our tax policies and explore more effective measures to enhance revenue collection,” Kuria told the National Assembly.

Kenya Revenue Authority (KRA) recently said it has collected a total of KSH8.7bn (€57.68m) from gambling firms over the past six months, a 30 percent increase over the same period last year.

This is largely thanks to operators being integrated into the Electronic Tax Invoice Management System (eTIMS), which allows companies to remit their taxes on a real time or near-to-real time basis. Integration to the system is a requirement under the proposed changes.

A raft of tax increases proposed in the bill, which affect far more than just the gambling industry, has caused some public backlash from various affected industries and stakeholders.

The Media Owners Association (MOA) of Kenya recently asked the government to remove the inclusion of a 15 percent excise duty fee for advertising on television, in print media, on billboards and radio stations, which would apply to alcoholic beverages and all forms of gambling.

However, in the latest budget statement, cabinet secretary for the National Treasury and Economic Planning, Njuguna Ndung’u, called the consumption of alcohol, betting and gaming “harmful”, especially “to the youth and families” as he included the 15 percent advertising tax in the speech.

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