This archive report was first published on 10 August 2019.
Betting Firms Lose in Withholding Tax Battle ¶
On August 10, 2019, the High Court in Nanyuki ruled in favor of the Kenya Revenue Authority (KRA) in a case involving betting firms, stating that winnings from betting are subject to tax.
The ruling came after a betting enthusiast, George Lesaloi Selelo, filed a petition in 2018 arguing that winnings from betting were not income and should not be taxed. The petition was consolidated with that of Betway, which sought clarification on the definition of 'winnings' as defined under Section 2(b) of the Finance Act 2018.
The government had imposed a 20 per cent withholding tax on winnings, but the industry disagreed with the definition of 'winnings' given by the National Treasury. The Treasury believed that the total amount to the gamers, including the amount they had bet, should be subjected to a 20 per cent withholding tax, while the industry argued that KRA should only tax the winnings.
High Court Judge Hatari Waweru dismissed the petitions, stating that the intention of the legislation in enacting a new definition was to widen the tax base. He also noted that taxes are not meant to be fair, but rather a burden that society must bear.
Some betting firms have started deducting the 20 per cent withholding tax in a bid to comply with directives from the Betting Licensing and Control Board and KRA. Other cases are ongoing in court, including one at the Tax Appeals Tribunal challenging the different taxation measures as well as the definition of winnings.
