Kenya moves to cut controversial tax rate after parliament showdown

Kenya, sportspesa, tax, politics, africa
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Kenya’s President has fought off stoic parliament opposition and signed off on a finance bill that will see the end of the much maligned 35 percent tax on gaming revenue.

Kenyan President Uhuru Kenyatta has positioned himself firmly at odds with members of the nation’s parliament after he signed off on a measure that would cut the nation’s controversial 35 percent tax on gaming revenue down to 15 percent.

Kenyatta had previously told ministers that they were required to vote to approve the cut on gambling taxes despite overwhelming opposition.

“We are going to reject the President’s proposal to cut tax on gambling because of its social impact. This is where we are going to differ with the President,” a House leader, who wished to remain anonymous told press.

Such has seemingly had little impact on the head of state who announced that he has now signed off on the Finance Bill 2018 following its passage in a reportedly chaotic parliamentary session.

Such represents a considerable u-turn for the man who not 12 months ago gave final approval for the tax hike, but one that is sure to be welcomed by operators and understandably so.

The new finance bill will see the blanket 35 percent revenue tax, only introduced in January, cut down to 15 percent across all sectors whilst increasing the levy on bettors winnings to 20 percent.

Since its introduction the 35 percent levy on revenues had understandably found few supporters within the industry with a number of companies either threatening to pull operations from the country, or doing so all together.

It is claimed that the new rate will generate some $297m (SH30b) per annum for the national government and more importantly should see the tide of operators leaving the market stemmed if not reversed.

The loss of taxable companies seemed of little consequence to supporters of the measure, many of whom reportedly spent portions of the latest legislative session hurling insults at National Assembly majority leader Aden Duale for his role in supporting the cut.

The headline-grabbing reduction however does present somewhat of a front for a number of other pecuniary measures that could yet have a negative impact on operational bottom line.

Gambling companies will still be required to pay 30 percent corporation tax and the new bill will introduce a 15 percent levy on internet and data services and a 20 percent rate on fees that banks charge for money transfers.

Industry lobbying appears to have had its say, for in what appears to be of little coincidence, the day that Kenyatta signed off on the bill SportsPesa announced it is to not only revive a number of its contracts, but advance funds due at the end of the month to a local football club, Gor Mahia.

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