Kenyan President Targets Tax Hikes

May 24, 2023
Back
Kenya’s President has defended the controversial Finance Bill 2023, which would increase the excise duty on lotteries, betting and gambling, as well as change the definition of “winning”.

Body

Kenya’s President has defended the controversial Finance Bill 2023, which would increase the excise duty on lotteries, betting and gambling, as well as change the definition of “winning”.

Speaking during a development tour on March 21, President William Ruto said the raft of tax increases included in the bill, which have come under fire from opposition legislators and some business owners, will improve the lives of Kenyans and touted a housing programme that he said will “provide at least one million jobs”.

Gambling is one of the industries that is expected to help pay for this.

Among the raft of proposed excise duty changes in the bill, including increasing the excise duty on betting, gaming and prize competitions from 7.5 percent to 20 percent.

It also proposes to increase the lottery excise duty from 7.5 percent to 20 percent.

The Kenyan Revenue Authority (KRA), the government agency responsible for collecting taxes, is challenging a recent bombshell High Court decision that forced the removal of a 7.5 percent excise duty tax on gambling activities.

On the KRA website, there is no mention of the 7.5 percent duty still being in place.

The KRA confirmed to VIXIO GamblingCompliance in March 2023 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 judgment was issued just weeks after the KRA unveiled 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 and a 20 percent withholding tax on winnings.

The Finance Bill 2022 similarly proposed increasing the excise duty from 7.5 percent to 20 percent, something which KPMG has warned in the past, along with other tax burdens, would be the nail in the industry’s coffin, but the change was never implemented.

The accounting firm said in its assessment of the new Finance Bill that the latest proposal of a “substantial increase” in the excise duty rates has been forced on the government as it looks to “bridge the revenue gap”.

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 that “despite there being a definition, the proposal seeks to eliminate ambiguity on the taxation of the payout on the staked and wagered amounts”.

Our premium content is available to users of our services.

To view articles, please Log-in to your account, or sign up today for full access:

Opt in to hear about webinars, events, industry and product news

To find out more about Vixio, contact us today
No items found.