Kenyan business community embroiled in KRA betting tax dispute

The Kenyan Revenue Authority (KRA) states that it will not shy away from its tax battle with bookmakers SportPesa and Betin, in a row that could pit multiple Kenyan business stakeholders against licensed betting incumbents.

This week, Asha Salim KRA debt enforcement manager demanded to Bob Collymore, CEO of Safaricom, a payment services provider for SportPesa and Betin, pay the bookmakers combined SH 8.5 billion (€72m) disputed tax charge with immediate effect.

The KRA has previously charged holding companies Gamcode Limited (Betin) with SH 5.2 billion (€45m) and Pevans East Africa (SportPesa) with SH 3.2 billion (€28m) for withholding tax arrears.

Salim’s demands have embroiled Safaricom, Kenya’s biggest telecoms provider in the tax dispute, as the government agency notes that Safaricom mobile wallets had been used by Betin and SportPesa customers to engage with the betting operators services.

The Kenyan bookmakers’ tax arrears dispute relates to a long-running row between the betting firms and the KRA with regards to withholding 20% tax charges on winnings paid to customers’.

Through its auditor, PWC SportPesa has claimed that the KRA’s tax assessment was based incorrectly on the ‘wrong definition of player winnings’

“Pevans avers that the definition of winnings under the Betting, Lotteries and Gaming Act, is vague and ambiguous and difficult for a taxpayer to construe what payments were in the nature of winnings,” PWC states in a former letter challenging KRA’s position.

Contesting charges, Betting firms state KRA has lumped together customer stakes and winnings and simply calculated a 20% withholding tax, instead of applying its charge on ‘winnings alone’.

Betin and SportPesa further maintain that their actions are supported by Kenya’s High Court, which has issued a former injunction against KRA, stating that no enforcement can be undertaken until all stakeholders are heard on the dispute.

However adding to the bookmakers’ woes, Kenyan Interior Secretary Fred Matiangi supports KRA stance, stating that his department will move to suspend Betin and SportPesa licenses (in a two week period) unless they undertake payment of arrears.

Safaricom governance has issued a statement detailing that it will not comment on the matter.