This is in addition to the previous 20 per cent tax on winnings that customers were subjected to prior to the enactment of the Finance Bill.
The local gaming industry has lost 50 per cent of its customers as punters move to off-shore sites to avoid the local complex tax regime.
The gaming industry wants Kenya Revenue Authority(KRA) to harmonise taxes in the sector to eliminate confusion over multiple taxes and lack of a clear taxation module.
This comes even as punters shun local companies in favour of off-shore betting companies which are not taxable locally, a loss to both the taxman and the local gaming industry.
The gaming business which has been largely disrupted this year over tax disputes with KRA was recently slapped with a new excise duty chargeable on stakes at the rate of 20 per cent as per the Finance Act 2019.
KRA issued a public notice on November 26, alerting industry players of the new tax, after the Finance Bill 2019 became law on November 7.
“Following the enactment of the Finance Act 2019, Kenya Revenue Authority informs all punters, players, operators and stakeholders in the betting and gaming industry that excise duty on betting is chargeable on all stakes placed by punters on bookmakers at the rate of 20 per cent,” KRA said.
This is in addition to the previous 20 per cent tax on winnings that customers were subjected to prior to changes in the law.
Betting companies are also paying corporate tax among other levies to operate in Kenya.
According to the Association of Gaming Operators, the multiple taxes and increased competition has seen the local sports gaming sector lose about 50 per cent of its customers to offshore online gaming companies.
In a plea to the government at a meeting with the Kenya Revenue Authority last week, the industry players say this has created an uneven playing field in the Kenyan market.
“Players are opting to use our competitors who are outside Kenyan tax jurisdiction and therefore causing huge loss of business to us and consequently loss of tax for the government,” said AGOK oficial Mutua Mutuva.
He said there is also confusion on how the new excise tax should be implemented, whether on the placing of a bet or after winnings, to allow gaming companies collect the duty for KRA.
“While excise tax will have been charged on a player once they place a bet, they can cancel the bet or the bets may be voided for one reason or another,” said AGOK.
They said in her understanding, the excise tax which had been charged should be reversed and credited back to the customer together with the stake amount.
“We implore the authorities to consider this disadvantaged position we have been put by these multi layered taxes,” said the association whose membership comprises of casinos and sports gaming companies.
They said a a simplified tax platform, will enhance compliance and understanding by the companies to avoid any grey areas that lead to disputes with KRA.
“We are very ready to pay tax. We need clear guidelines and consultations so that we can help KRA meet its revenue collection targets for the industry,” argued the association.
KRA deputy commissioner for policy affairs Caxton Masudi asked the industry to embrace dialogue with the agency to improve relations for achievement of a win-win situation.
Masudi said the KRA wants a stabilized betting industry to ensure sustained revenue collection from this emerging source of income for the government.