Kenyan Authorities Appeal Ruling That Removed Controversial Tax

February 16, 2023
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Kenya’s government agency responsible for collecting taxes is challenging a recent bombshell High Court decision that forced the removal of a controversial 7.5 percent excise duty tax on gambling activities.

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Kenya’s government agency responsible for collecting taxes is challenging a recent bombshell High Court decision that forced the removal of a controversial 7.5 percent excise duty tax on gambling activities.

The Kenya Revenue Authority’s (KRA) commissioner for legal services and board coordination told VIXIO GamblingCompliance that it was “dissatisfied” with the recent judgement.

The KRA has already gone to the Court of Appeal in order to file a notice of appeal.

The judgement found that parts of the Excise Duty Act 2015, amended by the Finance Act 2021, which detail a 7.5 percent wagers tax, are in violation of the constitution for failing to comply with “public participation, stakeholder engagement and fair administrative procedures requirements”.

A judgement declared the taxes “unconstitutional, null and void and of no legal effect. They are hereby quashed.”

The KRA has now confirmed that the High Court ruling means “that Excise Duty on gaming and lottery is not collectible”.

However, it noted: “Paragraphs 4A and 4C of the First Schedule to the Excise Duty Act, 2015 were left intact and continue to be in force undisturbed. The paragraphs allow the charging of Excise Duty on betting (4A) and prize competition (4B) which taxes continue to be collectible."

The judgement was issued just weeks after the KRA unveiled its plans to have all online gambling operators transmit both daily payments and transactions data in real-time by the end of March 2023, aimed at retrieving the excise tax (7.5 percent on stakes) and withholding tax (20 percent on winnings).

Neighbouring Uganda is also stepping up its efforts to modernise tax collection in its own gambling industry.

Uganda has similarly tried for a long time to update its own methods of tax collection to help stop leaks.

After years of waiting, the country has finally begun to sign up all of the gambling machines and equipment in the country to a central monitoring system, which is aimed at improving tax revenue collection, preventing money laundering and promoting responsible gambling.

Last year, speaking to Uganda’s parliament on April 20, 2022, Keefa Kiwanuka, chairperson of the Committee on Finance, said the gambling sector contributed SHS43.4bn (€11.4m) to the economy, “notwithstanding limited resources for monitoring gaming activities country-wide”.

The committee recommended that an additional SHS5.75bn is allocated to the National Lotteries and Gaming Regulatory Board for the creation of a National Central Electronic Monitoring System to prevent operators from dodging tax.

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