Pressure has continued to mount on the Kenyan government over plans to implement a 20% tax on winnings, reversing last year’s decision to slash the tax rate to 5%.
The country’s gambling regulator has urged the government to once again U-turn and shelve the plans, citing that it would be too challenging to implement and would have a detrimental effect on the industry.
Less than 12 months ago, the decision was made for the withholding tax in the country to be dipped to 5%, and to be implemented when a player withdraws from their betting wallet.
However, policymakers now want to push the rate back up to 20% and levy it on winnings, minus the player’s stake.
Furthermore, such a quick reversal from the 5% rate would only serve to aggravate the industry. Added to this is the fact that ‘all funds for gambling purposes’are also subject to a 5% tax rate.
The bill states: “Amount deposits means the total value of money or money’s worth paid, transferred or otherwise made available for betting or gambling purposes. Whether provided by a player or the operator, whether in cash or cash equivalents, whether or not such amount is held in an account operated by a player, operator or licensed person, or converted into chips, tokens, tickets, credits, or similar instruments.”
There has been a continued tug of war within the country, and the latest intervention by the country’s gambling regulator, made in person before the National Assembly’s Committee on Finance and National Planning in Nairobi, only serves to escalate this friction.
The regulator is also rallying back against the proposed definition of winnings, which it is warning will bring a real lack of clarity to the market and the way the country is taxed for gambling.
Specifically, they emphasised the need for the 20% withholding tax on winnings from prize competitions and short-term lotteries, to be scrapped as simply not necessary and unfeasible to the market.
In particular, the authority questioned how the tax would be collected when the prize paid out is a good, such as a washing machine or car, compared to a cash prize.
The body also noted that tax revenue collection has increased under the 5% mandate, compared to when the withholding tax was previously 20%.
At the heart of the call for pauses is the need for a simplification of the tax, with the proposed framework in its current format lacking clarity and the nuance of such a complex sector.
