KRA to challenge reduced tax on betting prizes

The Kenya Revenue Authority will challenge the judgment of the Tax Appeals Tribunal (TAT) delivered in favour of betting firms.

Last week, online betting companies won a bid to stop KRA's over-taxation on betting prizes.

The Tax Appeals Tribunal of betting firms ruled that the 20 per cent withholding tax should be based on net winnings and not on the gross.

In a statement on Monday by KRA'S Legal boss Paul Matuku, the taxman challenged the tribunal's decision.

Matuku argued that the decision departed from the earlier decision by Justice Hatari Waweru’s in a Meru High Court case.

The judge had found that there was no ambiguity in the interpretation of the term “winnings” as defined by the Income Tax Act.

"In arriving at its decision, the TAT found that Justice Hatari Waweru’s decision was inapplicable hence not binding on it because it had not delved into the definition of the term 'winnings', " read the statement.

 KRA further argues that the tribunal’s finding had no legal backing in demanding withholding Tax from the Betting Firms and the manner in which it had enforced collection of the tax.

KRA has commenced the appeal process by filing a notice of appeal which it did on November 8.

The Earlier law provided for 20% tax on the net winnings which would be arrived at by deducting from the punter's staked amount.

This was however revised to include gross winnings.

The betting companies interpret winnings as “ the positive difference between the payout made and stakes-placed in a month”.

KRA, on the other hand, interpreted winnings as the gross amount of the payout including the staked amount