• On Tuesday, court stopped operations of crucial Income Tax Act rendering KRA unable to collect taxes from betting firms.
• Sportpesa insists it will keep remitting taxes from wins as 'a law-abiding corporation'.
Betting giant Sportpesa has reassured KRA of its willingness to comply with tax regulations despite the move by a commercial court to block the taxation of betting proceedings.
"Sportpesa is a law-abiding corporate citizen that upholds all tax and regulatory requirements. Sportpesa has previously been audited by the regulator (KRA) and earned certificates as a mark of full compliance. The business will continue to fulfil all tax payment requirements, including withholding tax as directed by the law," CEO Ronald Karauri said in a statement.
"As Sportpesa, we reaffirm our commitment to supporting the government’s economic development agenda by operating as a law-abiding business that is committed to tax compliance."
On Tuesday, senior resident magistrate D.M. Kivuti stopped the operations of crucial Income Tax Act sections (2, 10, 34 and 35), effectively rendering KRA unable to collect taxes.
The move crashed the taxman's hopes of collecting Sh2.7 billion per month from betting wins.
The money was earmarked for national development projects, according to a KRA statement.
Taxes drawn from betting activities are set aside to finance sports, art, cultural developments and the rollout of the Universal Health Coverage programmes, according to Treasury Cabinet Secretary Henry Rotich in his budget statement.
The order issued by Kivuti follows a suit filed in 2014 by Benson Irungu seeking to stop Pevans East Africa (Sportpesa operator) from deducting and remitting taxes from the applicant's and any other person’s winnings.
Aggrieved by an earlier order stopping deduction of taxes from Sportpesa wins, KRA sought to be enjoined as an interested party to block the earlier orders.
The orders were subsequently overturned on March 29 allowing KRA to continue collecting due taxes from Sportpesa among other betting companies.
However, in a surprising and frustrating turn of events, Irungu moved to court a fortnight ago seeking orders for the stay of execution against last month's ruling by senior resident magistrate Isaac Orenge.