SportPesa sues State over tax

CEO SportPesa Ronald Karauri. [Photo: Jonah Onyango/Standard]

Betting firm SportPesa has sued the Government over the introduction of a 35 per cent tax on gaming revenue.

The suit filed on Wednesday accuses President Uhuru Kenyatta of overstepping his mandate and coming up with the ‘arbitrary figure’ without consulting tax experts and the public as required by law.

Pevans East African Limited, which owns SportPesa, says the President’s recommendation to Parliament should have gone through the whole law-making process including public participation and technical review by The Treasury and Kenya Revenue Authority experts.

“The President arbitrarily imposed his subjective opinion on what ought to constitute State tax policy while ignoring public participation and the input of fiscal technocrats who concluded that 50 per cent tax for the betting industry was unsustainable and unnecessary, hence omitted it from the Bill,” SportPesa Chief Executive Ronald Karauri says in an affidavit.

He said the President decided to override the parliamentary process, which had thrown out the proposal to introduce a tax charge of 50 per cent proposed by National Treasury Cabinet Secretary Henry Rotich.

The betting firm wants the court to quash the amendments to the laws enforcing the charge.

It also wants the court to declare that the charge infringes on its right to engage in the business of betting and is, therefore, unconstitutional.

Initially, the sector has been taxed in line with the Finance Act, 2016 that came into force in January and introduced 12 per cent tax on gaming revenue, 7.5 per cent betting tax also chargeable on gaming revenue, five per cent lottery tax on lottery turnover, and 15 per cent prize competition tax chargeable on gross turnover.

Mr Karauri said stakeholders and public finance specialists had agreed that the 50 per cent proposal was unworkable, and that it was struck off in the recommendation approved by the National Assembly on May 30, 2017 before it was first presented for assent.