Kenyan betting firms against tax rates

Local operators are urging the government to review the new regulations that impose a 35 percent of gross profits.

Kenya.- Sportpesa’s Chief Executive Officer, Ronald Karauri, said this past weekend that the new taxation system that is set to be implemented in Kenya will terminate his business in the country, as well as other companies’.

“We are looking at various options to see what can be done. We still have six months to go but it is not looking very good for the industry. Should he same taxation apply to other sectors of the economy companies will fold and many will be rendered jobless,” the official said on Saturday. Uhuru Kenyatta, president of Kenya, signed the law that authorises the significant rise of gambling taxes from 5 to 35 percent in late June. Following his approval, the company’s CEO announced the cancellation of its sponsorship of local sports bodies starting January 1.

Despite the several complaints coming from the CEO, on Sunday the company said on its Twitter page that “SportPesa was the first and remains the best gaming brand in Kenya and SportPesa will be the last gaming brand to ever close in Kenya for whatever reason.” The statement also detailed that the CEO was simply trying to demonstrate that no business can survive heavy taxation on revenue and not profit.

Moreover, on the last day of June, the Consumer Downtown Association (CDA) presented a petition to the office of the President Kenyatta, in order to complain about the increase in gambling taxes. The executive director of the CDA, Japheth Ogutu, said that the tax hike will hurt regular consumers that are subscribed to the products and services of the lottery. Ogutu believes that the State should ask stakeholders before implementing the new law, as he feels that their input didn’t have any weight. Until the new measure, casino gambling contributed with 12 percent, whilst competitions were taxes at 15 percent. Lotteries were under a 5 percent tax, and betting firms and bookmakers a 7.5 percent. Ogutu said that this will kill the industry.

Karauri sent submissions to the Parliamentary departamental committee on labour and social welfare in order to call for retention of the current tax regime, as The Star revealed.