Kenya to impose 20% tax on gambling winnings
Kenya yesterday gave the clearest signal yet that it will vigorously pursue gamblers for a share of the lottery and betting windfalls with a planned re-introduction of a 20 per cent tax on winnings.
The Tax Laws (Amendment) Bill 2018 seeks to restore the tax charged on betting winnings that was dropped in 2016 due to numerous hiccups in its implementation.
If passed, betting and gaming companies will withhold a fifth of the sums won by punters to be remitted to the taxman piling additional tax burden on an industry that is already paying 35 per cent of gross earnings to the exchequer.
“The Bill seeks to amend the Income Tax Act to introduce a tax on winnings,” says the proposed law that was tabled in Parliament yesterday.
Tax experts said that should the Bill sail through, the taxman will demand that betting companies deduct and remit the 20 per cent withholding tax on every gaming win.
Fred Omondi, a tax consultant at Deloitte, said there should be clarity on how the windfall tax will be charged in cases where gamers win property like cars, as opposed to cash from which it’s easy to deduct the levy.
“The tax on winners was partly dropped because of tax administration and implementation challenges that the State is assumed to have studied and resolved,” said Mr Omondi.
The new tax saw Pambazuka National Lottery suspend its Kenya operations, while gaming giant SportPesa put on ice a Sh600 million sports sponsorship deal with local football, rugby and boxing clubs.