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SportPesa cries foul over plan to raise taxes

Kenyan betting giant SportPesa has said the Treasury’s plan to raise taxes for companies in the budding industry could stifle growth.

SportPesa chief executive Ronald Karauri said that while the firm is not opposed to taxation, the planned increase in betting taxes could be counter-productive.

“Kenya Revenue Authority needs to work with stakeholders in the gaming industry before implementing new tax laws. If KRA’s intent is to collect more revenue from this sector, it must involve stakeholders,” Mr Karauri said last week at a summit organised by the taxman in Nairobi.

RUNAWAY SUCCESS

The higher tax is part of the government’s plan to claim its share of the betting industry’s runaway success. The move is expected to yield billions of shillings to the exchequer.

The tax measures, set to come into force in January, are contained in the Finance Act 2016 and will see betting firms part with a sizeable chunk of their revenues every month besides paying the annual corporate tax.

Under the new legal regime, companies will pay a 7.5 per cent betting tax, 12.5 per cent gaming tax and five per cent lottery tax on revenues earned.

Mr Karauri said that betting firms have boosted the sports industry, created jobs and helped launch and grow sporting careers.

“We submit weekly returns to our regulator, the Betting and Licensing Control Board. In addition all our betting platforms are mobile phone based. Therefore it is very easy for KRA to track our revenues and the issue of tax evasion should not arise,” he said.

“Most of the engagement we have had with KRA are threats and audits and this needs to change. We are a major taxpayer and are doing lots of work to improve and develop sports in this country.”

PUNITIVE TAX

Experts had earlier described the tax measures as punitive, indicating that the government may have overreacted to a recent public uproar over the rapid growth of betting and gaming.

Kenya has 30 licensed bookmakers, 10 of which operate online platforms.

SportPesa was launched in Kenya in February 2014 by local company Pevans East Africa and is among betting firms which have witnessed exponential growth. It now has tens of thousands of unique users and its monthly net revenues are estimated at Sh1 billion.