Kenya Finance Committee Rejects Government’s Tax Hike Plan – Legal & Compliance

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The Finance and National Planning Committee of the National Assembly of Kenya has released its updated version of the country’s Finance Bill, following a public comment period on the version of the Treasury Bill.

In the committee’s version of the bill, the excise tax on betting stakes would remain at 7.5%, while no new tax would be introduced for gambling advertising.

Both were amendments to the Treasury’s version of the bill, which proposed a 20% excise tax on betting stakes, plus a 15% tax on gambling-related advertising expenditures. by chance.

The committee argued that this was unwise, however, as the current rate of 7.5% has been in place for less than a year, so there has not been sufficient time to judge whether this has been a success.

“The committee has observed that excise duty on gambling activities has been increased in the Finance Act 2021 and therefore it is necessary to give time to the sector before the taxes are increased,” said the committee. “The committee therefore recommends that the amendment be deleted.”

Regarding the tax on advertising expenditure, the committee pointed out that “there are already regulations regulating the advertising of gambling activities in the country”. As a result, he said there was “no need” to attempt to also indirectly regulate gambling advertising through taxation.

The Treasury had tried to increase the tax on betting stakes to 20%. The rate was previously raised from 10% to 20% in 2019, and since then has become a major source of conflict with efforts to both raise and lower the tax rate.

After the 20% increase came into effect – which itself followed a long dispute over a different 20% tax on players’ winnings – local market leaders Sportpesa and Betin both withdrawn from the market.

In 2020, however, the Finance Committee said tax revenue was lower after the rate increase, in part because of these market exits. He therefore proposed to repeal the tax entirely, a proposal which was accepted by Parliament and signed into law by President Uhuru Kenyatta.

However, Treasury Secretary Ukur Yatani immediately said the tax should never have been removed and that the government was working to reinstate it.

It has taken steps to achieve this with the Finance Bill 2021, which again stated that excise duty should be 20% of the amount wagered or wagered on betting products.

However, the finance committee again made changes, this time reducing the levy on participation to 7.5%.

This came after the committee heard testimony from a number of stakeholders, including Sportpesa. The operator, which resumed operations in Kenya in November 2020 after an earlier attempt was foiled by a legal challenge, argued that the stake tax was against the country’s excise duty law .

The 7.5% rate was finally included in the final version of the finance bill which became law.

The bill will now be submitted to the National Assembly, where it could possibly be subject to further modifications. If approved by both the National Assembly and the Senate, it can be signed into law by Kenyatta.

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