KRA hits a snag in taxing betting money

Kenya Revenue Authority Headquarters in Nairobi (PHOTO: File)

NAIROBI, KENYA: The Kenya Revenue Authority (KRA) has hit a technical snag in its efforts to collect taxes amounting to more than Sh2.7 billion per month accruing from betting wins following a court order issued by a magistrate’s court. 

The orders issued by Senior Resident Magistrate D.M. Kivuti sitting at the Milimani Commercial Courts have stopped the operations of crucial Income Tax Act sections (Sections 2, 10, 34 and 35) effectively rendering KRA unable to collect taxes amounting to Sh2.7 billion per month earmarked for national development projects.

As per the budget statement read last year by National Treasury Cabinet Secretary, Henry Rotich, taxes drawn from betting activities are earmarked to finance sports, art, cultural developments and the rollout of the Universal Health programmes. 

The order issued by Senior Resident Magistrate Kivuti follows the 2014 filing of a suit by a Mr. Benson Irungu against Sportpesa Ltd trading as Pevans East Africa. The suit sought to stop Sportpesa from deducting and remitting taxes arising from Benson Irungu and any other person’s winnings. 

Aggrieved by an earlier order stopping Sportpesa from deducting withholding tax on winnings from betting, KRA, which had not been a party to the case, sought to be enjoined as an interested party while seeking to set aside the earlier orders.

The orders were subsequently overturned on March 29th, 2019 allowing KRA to continue collecting due taxes from Sportpesa among other betting companies. 

However, in a surprising and frustrating turn of events for KRA, Mr. Benson Irungu moved to court a fortnight ago seeking orders for the stay of execution against the orders granted last 29th March by Senior Resident Magistrate Isaac Orenge. 

The new orders by Senior Resident Magistrate D. M. Kivuti were heard and issued in KRA’s absence and were only brought to the Authority’s attention last week Thursday the 18th April in the afternoon. 

KRA’s counsel led by Acting Commissioner Legal Services, Mr. Paul Matuku and assisted by David Ontweka and George Ochieng, have however managed to file their responses and submissions seeking that the orders granted by Senior Resident Magistrate D. M. Kivuti be vacated pending the hearing of the inter-partes case. 

At the hearing, Advocates appearing for Mr. Irungu requested the Court for more time to file their replying affidavits following KRA’s submissions. 

Part of KRA's protest letter (PHOTO: Courtesy)

The Senior Resident Magistrate D. M. Kivuti, however, declined to vacate the orders issued on 11th April 2019, directing all parties to file their responses and appear for hearing on Monday next week.