Tax: KRA releases a powerful statement to gamblers

Betting firms have begun deducting 20 per cent withholding tax from their customers’ winnings as they comply with directives from the Betting Licensing and Control Board and the Kenya Revenue Authority.

The move is despite an April court order that bars the betting firms from deducting and remitting the money to KRA, until a case by one of their customers challenging the taxation of winnings is heard and determined. The taxes were introduced last year by the Finance Act 2018 but have faced litigation and delaying implementation.

BetLion, among the firms that have complied with the KRA and industry regulator’s directive, has notified customers that it would be deducting 20 per cent from their winnings and remitting it to KRA.

“This means that customers will now get 80 per cent of the potential winnings going forward. As a business, we hope that customers continue to engage in responsible gaming. The revised taxation laws are a pragmatic response to a growing and vibrant industry,” said the firm.

The betting industry and the Government hold differing opinion on what should make up

The Government and the industry have been in a push and pull about taxing gamers that win prize money for placing bets for some time now, with the Government appearing to have won last year with the passing of the Finance Act 2018, which slapped winners with a 20 per cent withholding tax.

KRA has since notified gamblers that it expects betting firms to deduct and remit the taxes.

“Betting companies, are required to withhold winnings at a rate of 20 per cent… this means that if you place a bet and win Sh50 000 you will receive Sh40 000. The balance of Sh10 000 is withheld by the betting company and remitted to KRA,” said KRA in a statement.

“KRA taxes the winnings of punters (people who place bets) when they wage successful bets. It is important to note that placing of bets is a form of entertainment and does not lead to generation of income.”

Some of the sector players however are of the view that this might see their customers incur a higher tax burden that would wipe out their winnings as well as eat into the amount they had put in the bet.