The National Assembly of Kenya has passed a bill that effectively ends the excise tax on betting stakes, the same tax that led to operators Sportpesa and Betin pulling out of the country.
The 20% excise tax on bets, introduced in the 2019/20 budget, was initially due to be carried over in the 2020/21 finance bill, but an amendment put forward by the country’s Finance and National Planning Committee has now led to its removal.
According to those proposing the reform, the excise tax had hit the finances of betting companies, leaving them with little money to support sports clubs. The Committee also heard that the tax had led many Kenyan betting customers to switch to foreign-based sites.
In the ensuing National Assembly debate, Joseph Kirui Limo, who chairs the Finance Committee said that tax revenue from the betting industry was going down, and that repeal of the tax would lead to an increase in revenue. A further proposal, to reduce the tax on winnings from 20% to 10% was rejected.
The original implementation of the excise tax on stakes, which was passed by Kenyan MPs in September 2019, had a significant effect on Kenya’s betting market. Local brand SportPesa said that it would pull out of the market, and another operator, Betin, followed suit.
The tax was also another step the ongoing dispute between Sportpesa and Kenyan authorities relating to tax payments. Back in August last year, the firm cancelled all sports sponsorship deals in the country following a ruling that telecoms companies were to block payments to Sportpesa over a tax revenue dispute. At the time, the firm said it was planning legal action against the regulators, the Betting Control and Licensing Board and the Kenyan Revenue Authority.
The ruling was reversed in November last year, a decision that Sportpesa said they welcomed, but although they said they may reconsider their withdrawal from the market, they have not yet returned. They have also declined to comment on the new reforms.
The bill is now set to go to Kenyan President Uhuru Kenyatta, who has the choice to sign it into law or send it back to the Assembly for further changes. The President has previously spoken out against the gambling industry, so it remains to be seen if he signs the bill. In fact, last year, Kenyatta called on the Assembly to pass a complete ban on gambling.