Gamblers now start paying tax on winnings amid row

Betting firms have begun deducting 20 per cent withholding tax from their customers’ winnings as they comply with directives from the Government.

The move is despite an April court order that bars the betting firms from deducting and remitting the money to KRA until a case by one of their customers challenging the taxation of winnings is heard and determined.

The taxes were introduced last year by the Finance Act 2018 but have faced litigation and delaying implementation.

BetLion, one of the firms that have complied with the directive by the Betting Control and Licensing Board and the Kenya Revenue Authority (KRA), has notified customers that it would be deducting 20 per cent from their winnings and remitting it to the taxman. “This means that customers will now get 80 per cent of the potential winnings going forward. As a business, we hope that customers continue to engage in responsible gaming,” said the firm.

“The revised taxation laws are a pragmatic response to a growing and vibrant industry.

The Government and the industry have been in a push and pull about taxing prize money for some time now, with the former appearing to have won last year with the passing of the Finance Act 2018, which slapped winners with the withholding tax.

KRA has since notified gamblers that it expects betting firms to deduct and remit the taxes. "Betting companies, are required to withhold winnings at a rate of 20 per cent … this means that if you place a bet and win Sh50,000 you will receive Sh40,000.

"The balance of Sh10,000 is withheld by the betting company and remitted to KRA,” said the taxman in a statement.

Some of the sector players argue the move will wipe out their winnings.