Betting firms operating in Kenya are breathing a sigh of relief as the National Assembly Committee on Sports recommends adjustments to taxation rates in the proposed Gambling Control Bill of 2023.
The move comes as a welcomed reprieve for the industry, which has faced escalating taxation pressures in recent years.
The committee’s key recommendations include a reduction in the gambling levy from 15 percent to 13 percent of the gross gaming revenue.
Additionally, the proposed gaming tax, initially slated at one percent of the same revenue, has been advised for removal.
The government’s intention behind these levies was to curtail the appeal of the Kenyan betting market to firms and address concerns about the proliferation of gambling.
If adopted, these adjustments could prove significant for betting firms, whose revenues have been under siege due to heightened taxation measures.
The committee’s report emphasizes the potential consequences of introducing additional taxes, citing the risk of legal operators shutting down, the growth of illegal markets, and a subsequent decline in revenues for the state.
Currently, betting firms are taxed at a rate of 15 percent on their gross gaming revenue, calculated as turnover minus winnings paid out.
In addition to this, they face a 30 percent corporate tax on profits. Gamblers are not exempt, as they contend with a 20 percent withholding tax on every winning bet and an additional 12.5 percent excise tax per betting stake.
The Association of Gaming Operators, representing betting firms, had fervently petitioned Parliament to reconsider the proposed taxes, arguing that the industry is already burdened by excessive taxation.
The fate of the proposed taxes now rests in the hands of lawmakers, who are expected to review and potentially adopt the committee’s recommendations.
This development could pave the way for the passage of the Gambling Control Bill into law, sparing betting firms from additional financial strain.
Had the original taxation rates been implemented, betting firms would have faced further erosion of their earnings.
Over the years, these companies have grappled with declining profits amidst escalating taxation and a shift in gambling habits, with some bettors reducing or discontinuing their wagers.
As the industry awaits the final decision from Parliament, betting firms are cautiously optimistic about the prospect of a more favorable taxation landscape that could support their sustainability and contribute positively to the state’s revenue stream.
