Kenya’s tax laws faulted as firms exit
The future of formal betting industry in Kenya hangs in the balance as haggling over taxes takes a toll on companies and employees.
SportPesa is the latest firm to throw in the towel and exit the market, citing revenue deterioration after the government revoked its licence over a tax dispute, and with this, 400 jobs.
The firm, which operated Chancery House in Nairobi told its employees on Wednesday that their services were no longer tenable after it announced closure of its business in the country.
Insiders said 1,500 other jobs are also indirectly affected, with suppliers the biggest casualty.
Already, Gor Mahia and AFC Leopards football cubs, the country’s biggest soccer teams are feeling the pinch of the pull-out. At the centre of SportPesa’s woes is what they see as punitive tax regime.
Winning are taxed
“The new tax means that if you place a bet of Sh100, Sh20 is deducted and your bet actually becomes Sh80. This goes completely against how odds work in sports betting, and on top of that the winnings are taxed. Double taxation,” said a source who sought anonymity as he is not authorised to speak to the media on the sensitive issue.
Betin Kenya, which also ceased operations in July after the government declined to renew its licences, has also fired staff.
SportPesa Chief Executive Officer Ronald Karauri regretted the layoffs yesterday but insisted the firm’s services were no longer tenable following harsh government regulations.
Curiously, however, SportPesa which is English football club Everton’s main sponsor assured that the company’s tax row with the Kenya government would not affect the deal with the Premier League side. Similarly, it stated that the firm’s workforce in the Liver Building in Liverpool, UK, wiould also not be affected.
SportPesa like most betting firms has been at loggerheads with the government for months and imposition of a 20 per cent excise tax on all betting stakes was the last straw that broke the camel’s back.
The tough charges on winnings could soon see the addition of a 10 per cent duty on amounts staked should President Uhuru Kenyatta assent to the Finance Bill 2019.
Sportpesa clashed sharply with Kenya Revenue Authority (KRA) over inability to separate staked amounts from the actual winnings.