Betting firms lose battle on KRA's taxing of winnings

In Summary

• The court dismissed the petition on Thursday 8, meaning that tax man's interpretation on winning stands.

• Its term had been petitioned in 2018 by a tax man named Lesaloi Selelo who said taxing winnings taxable income is unconstitutional.

Betting firms have differed with KRA over taxing of winnings/
Betting firms have differed with KRA over taxing of winnings/
Image: STAR ILLUSTRATED

The High Court in Nanyuki has clarified on the interpretation of the term 'winning' as used by KRA when determining taxes to be paid by betting firms.

KRA taxes 20 per cent of the stake being returned to the player as well as 20 per cent of winnings.

Its term had been petitioned in 2018 by a tax payer named Lesaloi Selelo, who said taxing winnings as taxable income is unconstitutional.

Pevans E. A. Limited, Bluejay Limited and Acumen Communication Limited who were also included in the case as interested parties said winnings from betting, lotteries or gaming are not income, hence should not be subject to tax under the Income Tax Act.

Betway filed a similar case on October 23, 2018 sought for the interpretation of the term “winnings” as defined under section 2(b) of the Finance Act 2018 for purposes of taxation.

Betways alleged that the definition was a violation of its fundamental rights and freedoms under Article 27, 40 and 47.

The court found that both petitions were raising similar concerns, hence combining them to be heard as one case.

The court dismissed the petition on Thursday, meaning that the taxman's interpretation on winning stands.

KRA cleared 10 betting companies whose licences were not renewed on July 1 because of questions surrounding their tax compliance.



Betway, OdiBets, Mozzartbet, Ken Bookmakers, Lucky 2u, Eazi Bet, Kick off, Eastleighbet, Palms Bet and Bet Boss received tax clearance on July 22.



However, Betin and SportPesa, the two biggest betting companies in Kenya, were conspicuously absent from the KRA list of tax clearances.