Thursday, March 28, 2024

Winning a bet to cost you 20 per cent in taxes

Gamblers in Kenya are set to part with a 20 pent cent in taxes when they win their bets. This is according to a planned re-introduction of a 20 per cent tax on winnings.

The Tax Laws (Amendment) Bill 2018 seeks to restore the tax charged on betting winnings that was dropped in 2016 due to numerous hiccups in its implementation.

If passed, betting and gaming companies will withhold a fifth of the sums won by punters to be remitted to the taxman — piling additional tax burden on an industry that is already paying 35 per cent of gross earnings to the exchequer.

“The Bill seeks to amend the Income Tax Act to introduce a tax on winnings,” says the proposed law that was tabled in Parliament yesterday.

If the bill goes through, KRA will demand that betting companies deduct and remit the 20 per cent withholding tax on every gaming win.

Already, gambling companies have been hit with a 35 per cent tax on their revenues that took effect in January 2017. The new tax saw Pambazuka National Lottery suspend its Kenya operations, while gaming giant SportPesa put on ice a Sh600 million sports sponsorship deal with local football, rugby and boxing clubs.

Pambazuka’s pullout meant loss of millions of shillings in potential revenues that would have accrued to the Kenya Revenue Authority.

Eight major players in the betting sector paid Sh4.7 billion in taxes over the three-year period ending 2016.

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