SportPesa Complies To Court's Suspension Of 12.5% Excise Duty On Bets

• Justice Patrick Otieno directed the Kenya Revenue Authority (KRA) not to demand 12.5% excise duty on bets
• This would be until the case filed by Edward Okwama, a betting enthusiast, is heard and determined
• TUKO.co.ke has learned that SportPesa has taken swift action in response to the court's decision, as recent withdrawals made by the punters had no excise duty

In August, in a ruling that handed punters a major win, the High Court stopped the deduction of 12.5% excise duty on bets.

In the verdict, Justice Patrick Otieno directed the Kenya Revenue Authority (KRA) not to demand the tax.

This would be until the case filed by Edward Okwama, a betting enthusiast, is heard and determined.

Further in the ruling, Otieno asked, among others, betting firm Milestone Gaming Limited, which owns SportPesa, not to deduct the aforementioned tax from betting fans.

Why SportPesa stopped deducting 12.5% excise duty

TUKO.co.ke has learned that SportPesa has taken swift action in response to the court's decision.

Based on the recent withdrawals made by the punters, the withdrawal had no excise duty.

Okwama's legal battle is rooted in his belief that the current tax law is unjust. It imposes a blanket deduction on bets, regardless of whether the punter wins or loses.

He argued that this approach did not align with taxation principles and that there should be income or winnings for excise duty to apply.

"The problematic effect of this provision is that the 12.5% excise duty is levied on the applicant and other sports betting fans and players when they place a bet or play, notwithstanding if they win or lose their money," Okwama said.

Why government demands 12.5% excise duty on bets

Further, Okwama questioned why the government demands excise duty on bets when the same principle is not applied to other sectors.

He argued that this leads to a situation where punters are essentially taxed twice, as they also face a 20% withholding tax on their winnings.

Justice Otieno ordered Okwama to serve the betting firms, the Kenya Revenue Authority (KRA), and the Attorney General within 14 days.

The case is scheduled to be mentioned on September 21, and it promises to reshape the betting landscape in Kenya.

The outcome of this legal battle will have far-reaching implications, affecting not only the taxation of bets but also the overall dynamics of sports betting in Kenya.

Capacity building levy

In a separate story, the Kenyan government has proposed to operationalise the capacity-building levy pursuant to section 24(5) of the Public Procurement and Assets Disposal Act, 2015.

The capacity building levy shall be set at 0.01% of the contract price for all contracts valued at KSh 10 million and above.

However, the levy proposed by the Public Procurement Regulatory Authority shall not apply where the contract is 100% funded by a donor.