Betting is not all that merry except when you are winning, something that does not happen often. Betting has grown so rapidly and become excessively widespread in Kenya and its spread has had a major negative impact with a quick look into the market indicating that majority of the people engaging in sports betting are the youth.
Betting firms are seriously protesting against the Kenya Revenue Authority’s move to impose 20% withholding tax on all wins and their stakes. Treasury CS Henry Rotich had earlier introduced excise duty on all betting activities in Kenya at 10% of the amount one bets with.
This means that if that new proposal gets to parliament and is approved, Kenya’s millions of people who bet will lose their money to taxes just because they placed a bet and it won’t matter whether they won or lost, they will pay the taxes anyway. The excise duty of 10% means that if you bet with Sh500, then Sh50 will go to the National Treasury, which means you lose 10% of cash on each bet placed.
About withholding tax, ordinarily, the Kenya Revenue Authority taxes 20% on winnings only but it leaves out the stakes in their calculations. The problem with the new imposing tax proposal of 20% is that staked amounts are not separated from the actual winnings. Normally, if you place Sh1,000 on a sure bet with an odd of 1.03, that would translate to Sh1,030 if the bet is won but the current tax requirements would see 20% withholding tax amounting Sh206 taxed from the total amount and yet ideally the gambler only won Sh30.
Withholding tax on winnings in the betting industry in Kenya is one of the highest in the world at 20%, with Sweden at 18% and Finland at 9% with many of these other Governments charging the gross gaming revenue based on winnings. In 2018 alone, Sportpesa remitted Sh6.29 billion to KRA and Sh400 million as withholding taxes.
Many people have argued that the Government of Kenya needs to tame the runaway multi-billion industry which is the betting industry by enforcing regulations which will effectively govern the market. Is the Government really doing so or is it just driving the industry into an early grave?