Kenya backtracks on 20% betting tax withdrawal

Kenya’s Finance Ministry has confirmed that a controversial 20% tax on sports betting, which had seemingly been revoked by the country’s government, is set to be reintroduced in December.

Finance Minister Ukur Yatani revealed the proposals in a statement and confirmed the prior revocation of the tax was suggested during the committee stage of debates into the Kenyan Finance Act 2020.

Moving to dismiss reports that the Kenyan National Treasury had agreed the removal of the tax, Yatani reiterated the Kenyan government’s commitment to pursuing the taxation of the industry.

“Betting activities in the country have adversely affected the social fabric of our society, particularly the youth. In this regard, we wish to reiterate the commitment of the government on taxation of this industry so as to contain such vices,” said Yatani.

“Following various consultations and in line with the government’s commitment on mitigating against the social vices associated with betting activities, the National Treasury and Planning will be proposing to the National Assembly the reintroduction of the excise duty on betting within the next six months,” he added.

The move to revoke the tax was previously proposed by a Kenyan entity, Shade.co.ke, which argued the decision had caused operators to make cutbacks, including to lucrative sponsorship agreements with local sports clubs.

The National Assembly’s Finance and National Planning Committee responded to Shade, saying: “The reason behind [removing the tax] was that the high level of taxation had led to punters placing bets on foreign platforms that were not subject to tax and thereby denying the government revenue.”

The committee went on to suggest that a reversal on the 20% tax rate would negate the negative impacts that had been recorded so far via its implementation.

The removal of the tax had prompted relief from many sports betting operators and Kenyan sporting teams who had previously complained of significant damage being caused through loss of sponsorship revenues.

The controversial 20% tax on sports bets was instituted in August 2019 and followed a long-running dispute between the Kenyan government and sports betting firms over alleged unpaid tax.

SportPesa was one of the chief targets pursued by the Kenyan government, with the sports betting operator later pulling out of the Kenyan market entirely.

Last month, Malta-headquartered operator Betsson Group inked its first sponsorship deal with two Kenyan football teams, Gor Mahia and AFC Leopards, ahead of the launch of its Betsafe brand in the market.