Taxman strikes football clubs to boost revenue

By Macharia Kamau

Local football clubs have over the years dodged paying taxes and now the taxman is after them, demanding not only compliance but also the payment of tax arrears.

The Kenya Revenue Authority said it had carried an audit on the clubs and found that many of them have not been filing tax returns and in turn owe the taxman a substantial amount of money. Though KRA did not disclose the amount owed by the clubs, the money could be running into hundreds of millions, even billions.

KRA early this week served a letter to Gor Mahia, demanding Sh118 million from the team in unpaid taxes.

It however turns out that Gor is not the only football club that has not been remitting taxes to KRA. In a statement yesterday, the revenue collection agency noted that it is monitoring tax compliance among various entities across different sectors and football clubs have shown up on its radar as among the non-compliant organisations.

“In the first quarter of the current finance year 2013/2014 one of the focus groups was football clubs. A number of football clubs were found not to be filing returns or paying relevant taxes, for instance pay as you earn (PAYE) for their employees and players, as well as withholding taxes from those engaged on contract like coaches,” said Ezekiel Maru deputy commissioner marketing and communication KRA.

“It is important to note that sporting clubs are required by law to withhold and remit payroll taxes (PAYE) as well as withholding taxes where they apply as part of statutory deductions.”

“Under the Income Tax Act, sporting clubs are not exempted from making returns and such returns must be accompanied by audited accounts. In the absence of a return the Commissioner is empowered by law to carry out an assessment of and to estimate taxes due and any interests that may have accrued thereof.”

Boycott  games

KRA is increasingly focusing on the sports fraternity as it tries to widen the tax bracket and grow tax collections to match Kenya’s budgetary requirements.

It recently made a move to start taxing the winnings of Kenyan athletes that is now being fought by the runners, with many threatening to boycott international competitions where they have in the past bagged millions of dollars in the long races.

Others have threatened to move to other countries that they say would be appreciative of their talent and the impact their winnings have on growing the country’s image globally.

KRA collected Sh800 billion in the 2012/2013 financial year and is expected to increase this to Sh970 billion this year, but these are against a budget of Sh1.26 trillion last financial year and Sh1.6 trillion this year.