Treasury targets gamblers with a raise on betting tax
The National Treasury has proposed to peg excise tax on betting stakes at 20 percent up from the current 12.5 percent.
What you need to know:
- The National Treasury has proposed to peg excise tax on betting stakes at 20 percent up from the current 12.5 percent.
- Kenya has the highest number of young gamblers at 76 percent, placing the country ahead of Nigeria and South Africa.
Gamblers will pay the government Sh20 for every Sh100 they stake should lawmakers pass the Finance Bill, 2024.
The National Treasury has proposed to peg excise tax on betting stakes at 20 percent up from the current 12.5 percent.
The Bill is expected to be adopted by Cabinet and tabled in Parliament for debate and approval before the end of June.
The increase in tax is meant to lower the appeal of betting to millions of Kenyans, especially jobless youths, who have turned to gambling to earn a living
Kenya has the highest number of young gamblers at 76 percent, placing the country ahead of Nigeria and South Africa.
The new tax rate will also lower the amount that gamblers stake, in turn reducing the possible pay-out from a winning bet. The 20 percent excise tax will be in addition to a similar rate charged as withholding tax on every winning bet.
Betting firms are required to deduct the withholding tax and remit it to the Kenya Revenue Authority (KRA) by the 20th of the following month.
Besides gamblers, the State has also set its eyes on betting firms, last year proposing two new taxes through the Gambling Control Bill, 2023 that has since been debated in Parliament.
The Bill proposes a gambling tax to be charged at 15 percent of a betting firm’s gross revenue and a one percent monthly levy on the same revenue.
But the National Assembly Committee on Sports proposed the reduction of the gambling tax to 13 percent and removal of the one percent monthly levy in a report that was tabled before the House in December last year.
Increased taxation on the betting industry is bearing the desired impact at least in the eyes of the government. According to data from the Betting Control and Licensing Board (BCLB) published last year, betting firms made Sh60 billion in revenue for the 2021/22 year, an 80 percent drop from the Sh299 billion they posted in the year to June 2019.
The BCLB data further shows that gamblers spend an average of Sh2,500 to bet every month with 80 percent of the winning punters earning less than Sh30,000 per month.
The Treasury has previously failed in bids to tax betting stakes at the rate of 20 percent, after Parliament gave in to pressure from gaming firms and lowered the rate. The first time the Treasury proposed the 20 percent rate was in 2019. Excise tax on betting stake was increased to 12.5 percent from 7.5 percent in July last year.
