Gamblers and betting fanatics will not have to worry about 20 percent deductions on winning, at least for now, thanks to a betting enthusiast. Benson Irungu who moved to court to bar deductions by SportPesa takes on a law passed last year through Treasury, that allows betting companies and agents to withhold a fifth of the sums won by gambling backers.
Senior Magistrate Dennis Kivuti has refused to lift the ban that was ordered on April 11 2019 even after the Kenya Revenue Authority asked the court to stop the order. The tax man says that the order will freeze collections of about 2.7 billion monthly from winners, obtained from betting and lottery firms.
The matter that is to be heard Monday 29th April currently suspends the operation of sections; 2, 10, 34 and 35, under which deduction of withholding tax from winning on betting is legal. According to legislators, money deducted from betting and lottery winners is meant to finance sports, art, culture development and universal healthcare.
The implemented law had previously faced opposition and as a result dropped in 2016 only to be reinstated in 2018 as part of budgetary plans. The suit against SportPesa and other betting companies comes at a time KRA is accusing the betting firm of breaching provisions of Kenya Corporate Income Tax Act for failing to deduct withholding tax on betting winnings paid to customers.
KRA argues that the firm owes it a minimum of Ksh10.3 Billion of backdated taxes spanning a period of three years. The betting firm has however claimed that following a consumer dispute in May 2014, the courts instructed it not to deduct taxes from player winnings.
On top of the Ksh10.3 Billion “debt”, KRA has enforced penalties of Ksh1.5 Billion on top of an interest charge of Ksh1.1 Billion, a 2018 sanction.
The fresh court currently gives privilege to betting and gaming fans in an order “restraining the defendant (SportPesa), its agents and or servants from making any deductions on the plaintiff or on any person’s winnings in a bet or game of chance pending hearing and determination of the suit herein”.