Kenyan businesses avoid tax rise with Finance Bill

As a result of the signing of the country's Finance Bill, Kenyan operators would formally dodge the proposed tax increase on holdings for at least another year.

However, operators' marketing expenditures will be subject to a new tax.

President Uhuru Kenyatta signed into law a measure that maintains a 7.5% excise tax on wagering stakes.

Treasury had earlier sought to increase this rate to 20% and introduce a 15% excise tax on casino advertising expenditures.

However, upon assessment by the country's Finance and National Planning Committee, the rate was reinstated at 7.5%.

At the time, it was said that the current 7.5% rate had been in effect for less than a year, therefore it was too soon to determine if it had been successful.

In addition, the committee rejected a tax on casino advertising expenditures, comparable to the existing tax on alcohol marketing expenditures.

When debated on the floor of the House of Representatives, the tax on wagers was maintained at 7.5%. However, they reinstated the 20% tax on marketing expenditures.

After the measure was passed by Parliament and the Senate, it was delivered to Kenyatta, who signed it into law.

The country's excise tax on stakes has been a key source of contention in recent years, beginning in 2019 when the treasury increased the levy from 10% to 20%.

After this hike – which followed a lengthy battle over a different 20% tax on player wins – went into force, local market giants Sportpesa and Betin withdrew from the industry.

In 2020, however, the Finance Committee advocated decreasing the rate, citing the fact that tax income had reduced due to the burdensome taxes. This idea was adopted and incorporated into the Finance Bill for 2020.

Treasury Secretary Ukur Yatani then declared that the tax should never have been eliminated and that the administration was striving to reinstate it.

It made moves in that direction with its original version of the 2021 Finance Bill, which would have restored the rate to 20%.

However, the Finance Committee once more made modifications, this time decreasing the stake charge to 7.5%.

By fLEXI tEAM