Kenyan Lawmakers Reconsiders Reducing Current Gambling Taxes
Early in 2018, the lawmakers in Kenya had raised their taxes on betting and gambling to a whopping 35 percent. However, this new tax rule has proved to become a burden for the gambling industry as it is causing stakeholders to shy away from making any daring investments. As a result, the Kenyan lawmakers are being forced to lower betting and gambling taxes from 35 percent to 15 percent.
The government of Kenya is considering certain amendments to be added to the Betting, Lotteries, and Gaming Act. These amendments will be discussed as part of the Finance Bill for 2018. If the proposal for these amendments gains enough momentum within the parliament of Kenya, taxes on gambling and betting will soon be brought down to 15 percent.
The current tax bill was a part of the Finance Bill for 2017 and was approved by Uhuru Kenyatta, the Kenyan president in June 2017. A number of major players in the gambling industry were discontent as the bill came into effect on January 1, 2018. In addition to the 35 percent tax imposed on local gambling companies, international gambling companies with a gaming license in Kenya are also required to pay a 30 percent corporate tax. This is in addition to a mandatory contribution of 25 percent of their sales revenue for social causes. Under the new bill, the members of parliament are considering bringing down the contribution to the social causes from 25 percent to 5 percent.
After the Kenyan authorities instituted the hike of 35 percent on gambling taxes, Kenya became the most expensive country in Africa when it came to operating gambling businesses. Before the new rule that imposes a uniform tax on the entire industry, Kenya had varying taxes on different gambling services. Lottery operators were required to pay 5 percent of their revenue as tax while sports betting corporations were taxed at 7.5 percent. Casinos were taxed at 15 percent. If the proposed bill turns into law, then all gambling operations will be taxed at a uniform rate of 15 percent.
The heavy tax rate of 35 percent caused many gambling stakeholders to withdraw their sponsorship of the various sports teams and leagues.
Among the first of the companies to withdraw their sponsorship was SportPesa, the main sponsor of the Kenyan Premier League. However, the company is willing to reconsider their decision, should the taxes be brought down to 15 percent.