Kenyan President Approves Gambling Tax Increase

June 28, 2023
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Kenya has approved raising the excise duty on all forms of gambling to 12.5 percent and the introduction of a 15 percent tax on gambling adverts.

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Kenya has approved raising the excise duty on all forms of gambling to 12.5 percent and the introduction of a 15 percent tax on gambling adverts.

President William Ruto assented to the Finance Bill 2023 and the Appropriation Bill 2023 at the State House in the capital Nairobi on Monday (June 26).

The changes were included alongside a raft of tax increases in the controversial Finance Act 2023.

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

A final copy of the Finance Bill that passed parliament is not yet available; however, local media sources suggest there was no last-minute change to the gambling taxes, unlike last year.

The Finance Bill 2023 would also change the definition of the term “winnings” to mean the payout from a betting, gaming, lottery, prize competition, gambling or similar transaction under the Betting, Lotteries and Gaming Act without deducting the amount staked or wagered.

Consulting and tax service provider EY explained in its summary of the proposals that “despite there being a definition, the proposal seeks to eliminate ambiguity on the taxation of the payout on the staked and wagered amounts”.

The Finance Bill aims to raise part of the KSH3.6trn budget, according to parliament.

It follows the government’s desire to “scale down” spending in line with its “fiscal consolidation efforts in the light of debt servicing payments”, according to the President’s office.

Cutting spending and increasing tax collection has become a key political issue in negotiations between the country and the International Monetary Fund (IMF), which just recently agreed to loan cash-strapped Kenya €927m.

The Kenya Revenue Authority (KRA) has already reflected this political shift, collecting 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.

The boost to the country’s Treasury is down to licensed gambling 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.

Njuguna Ndung’u, the National Treasury and Economic Planning Cabinet's secretary, predicted in his budget statement earlier in the month that the Kenyan economy will grow by 6.1 percent in 2023, compared with an estimated growth of 5.5 percent in 2022.

Ndung’u said this will be achieved by the budget helping to stimulate the economy, generate employment and reduce the cost of living.

Previously, Ndung’u backed the need for an advertising tax on betting and gambling, calling it “harmful”, especially “to the youth and families”, dismissing concerns raised by the Media Owners Association (MOA) that warned it would lead to job losses in the sector.

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