This archive report was first published on 11 November 2019.
On November 6, 2019, the Tax Appeals Tribunal (TAT) delivered a judgement in favour of seven betting firms, including SportPesa and Betin, who had challenged the Kenya Revenue Authority's (KRA) interpretation of the term 'winnings' as amended by the Finance Act 2018.
The betting firms argued that KRA's definition of winnings, which included the stake, resulted in a loss for punters despite winning a bet. For instance, if a punter placed a bet with a stake of Sh 100 and won Sh 20, the withholding tax would be 20% of Sh 120 (Sh 24), a loss to the punter.
The betting firms proposed that the 20% withholding tax be deducted from the profit earned excluding the stake. In the same example, the punter would be deducted 20% of Sh 20, resulting in a profit.
The Tribunal ruled in favour of the betting firms, finding that the term 'winnings' as defined at Section 2 of the Income Tax Act does not include stakes placed by a punter. However, KRA disagrees with the TAT's decision, citing a Meru High Court case where Justice Hatari Waweru found no ambiguity in the interpretation of the term 'winnings'. KRA argues that the TAT's decision departed from this ruling.
KRA has commenced the appeal process by filing a notice of appeal on November 8, 2019. The move pushes the possible return date of the betting firms further away, as they had hinted at a comeback following their court victory.
