Betting operators in Kenya stand against the government’s tax demands

Bookmakers in Kenya decided to stand against the government's multimillion tax demands as they declared that the tax collector is wrongly confusing player deposits with their earnings. Betin and SportPesa are the two Kenya-licensed operators, that according to reports, have separately filed their Supreme Court lawsuits against KRA, the Kenya Revenue Authority. The KRA has actually requested Ksh26b (US$257m) as part of the operators' pending tax obligations.

As regards Betin and SportPesa in particular, the KRA announced that they should pay the combined amount of Ksh15.2b. Furthermore, the Kenyan government is planning to suspend the licenses of all betting operators that have not paid their taxes until the 1st of July. Nonetheless, both SportPesa and Betin have inquired the High Court to postpone the official decision regarding the KRA's demands until the whole legal matter is fully resolved.

It is also worth noting that the government argues that its licensees have failed to pay the 20% tax on the winnings of their players. On the other hand, the operators claim that they could not deduct the money because the players that were not willing to pay the tax have officially filed court challenges.

According to the lawsuit launched by SportPesa, the KRA was talking with Safaricom, Kenya's leading telecom company, in order to get the money that was being held in the operator's accounts. Safaricom is responsible for the operation of the M-Pesa money transfer service via mobile phone, which is considered as the leading way of funding betting accounts within the country. In addition to that, SportPesa states that the money in its Safaricom accounts belong exclusively to bettors who placed their bets on its website and that those funds are by no means held by Safaricom on behalf of SportPesa. Ronald Karauri, SportPesa CEO, claims that his firm might be led to the suspension of its operations, unless the Court offers them the much-needed protection from the KRA's abuse of power.

As regards Betin, in its filing it mentioned that its Safaricom accounts were frozen by the KRA's action and that led the Kenyan operator to temporarily suspend its operations. Betin also warned that if the current situation does not change as soon as possible, then it would not be able to keep on paying both its staff and its suppliers.

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