SportPesa CEO responds to queries on tax as KRA demands Sh61 billion from betting firms

SportPesa CEO Ronald Karauri when he appeared before the Senate Justice and Legal Affairs Committee over the halting of Licences and permits of betting and Gaming at County Hall,Nairobi on Wednesday 31/07/19[Boniface Okendo,Standard]

The taxman is demanding Sh61 billion from at least 27 betting firms in taxes before their operations can be restored amid protests the State was acting against a court ruling.

The Kenya Revenue Authority (KRA) yesterday told Senators that the firms were not remitting withholding taxes to the government.

Commissioner Elizabeth Meyo said out of the 72 registered betting firms, 27 had not complied while seven others have agreed with the agency on payment plans for the disputed tax.

But KRA, the Betting, Control and Licensing Board (BCLB) and Interior Cabinet Secretary Fred Matiang’i came under sharp criticism from the Senate Committee on Justice, Legal and Human Rights for acting against a court order.

The committee chaired by Nandi Senator Samson Cheragei said it reeks of impunity for the regulator to suspend operations of the companies and deport some of their directors yet the matter was pending in court.

Consequently, the committee ordered Dr Matiang’i and the regulator to appear before it this morning.

 “CS Interior must appear here tomorrow (today) alongside the Betting and Control Board. If we start treating court orders as tissue paper, we will end up with a country that does not obey the rule of law,” said the chairman.

Business operations

The High Court had granted interim orders restraining the regulator from interfering with business operations or stopping the firms from continuing to trade.

Nakuru Senator Susan Kihika accused the Interior ministry of disregarding the rule of law after Gamcode Ltd (trading as Betin) told the committee that its directors Leondro Giovando and Demonico Giovando were deported despite holding valid work permits.

“People were deported when their issues were still in court...If this is not impunity then I have no other word to call it,” said Ms Kihika.

Meru Senator Mithika Linturi said there was “public anger” over the matter. “I don’t know who they are that they can tramp on anyone,” he charged.

KRA, however, defended its position to enforce compliance, stating that the law requires the betting companies to act as Withholding Agents for KRA to withhold and remit the taxes to the Government.

“Raised assessments based on data obtained from Betting Control and Licensing Board (BCLB) total amount so far established and demanded is Sh61 billion,” said the commissioner.

She said the agency was in talks with the industry to come up with a lasting solution.

“The majority of the firms have come forward and made acceptable payment arrangements and commitment to comply with the law moving forward,” she said. 

“We are still engaging the remaining few with a view to agreeing on an acceptable payment plan and commitment to comply with the laws,” she added.

SportPesa on Tax

But SportPesa, through its Chief Executive Officer Ronald Karauri, told the committee that KRA acted in bad faith by asking the regulator to withhold its licence over the tax dispute.

Mr Karauri said the agencies should have waited for the court to make a decision on the matter.

“It is our view that the courts and the tribunal, having rightfully seized of the matters, should be allowed to resolve the issues expeditiously and that the regulator and KRA should not continue to abuse their powers to intimidate the business,” said Karauri.

He said despite the existence of court orders, KRA had repeatedly issued agency notices to network providers to shut down their paybill accounts.