In a significant development for the Kenyan betting industry, President Uhuru Kenyatta has signed a new bill into law that upholds the excise tax on betting stakes at 7.5%. This decision follows a period of debate and adjustments to the proposed tax rates and regulations. While the tax on stakes remains unchanged, a new tax on marketing spend has been introduced, potentially impacting operators in the sector.
Tax Rate on Betting Stakes:
Initially, there were attempts to increase the excise tax on betting stakes to 20%. However, following a review by the Finance and National Planning Committee, the rate was reinstated at 7.5%. The committee cited the need for more time to assess the success of the 7.5% rate, which had been in place for less than a year.
Tax on Marketing Spend Introduced:
One of the notable changes in the new legislation is the introduction of a tax on gambling advertising spend. Operators will now face a 20% tax on their marketing expenditure. This tax is similar to an existing levy on marketing spend for alcoholic beverages.
Parliament’s Role:
The bill underwent scrutiny and debate within the Kenyan parliament. Members of Parliament (MPs) eventually agreed to maintain the 7.5% tax rate on betting stakes. However, they reintroduced the tax on marketing spend at the rate of 20%. After approval by both the parliament and the senate, President Kenyatta signed the bill into law.
Historical Context:
The issue of excise tax on betting stakes has been a contentious topic in Kenya in recent years. In 2019, the treasury raised the rate from 10% to 20%, leading to the withdrawal of prominent market leaders, Sportpesa and Betin, from the Kenyan market. In 2020, there was a proposal to reduce the rate due to declining tax revenue. This proposal was accepted and incorporated into the 2020 Finance Bill. However, treasury secretary Ukur Yatani later announced the intention to reinstate the 20% tax, which was reflected in the initial version of the 2021 Finance Bill. The Finance Committee’s intervention led to a reduction in the stake levy back to 7.5%.
The signing of the new betting legislation into law by President Kenyatta provides clarity on tax rates and regulations in Kenya’s betting sector. While the excise tax on betting stakes remains at 7.5%, operators will now face a 20% tax on their marketing expenditure. These developments underline the dynamic nature of regulatory frameworks in the Kenyan betting market and the ongoing efforts to strike a balance between taxation and industry sustainability.