Betting tax issues in Kenya fire up once again

The months-long disputes on the betting taxes in Kenya have fired up once again as the leading betting providers are failing to pay their customers they due profits because of frozen accounts with the country’s payment providers.

The old wound was opened when the country’s largest sportsbooks, SportPesa and Betin challenged allegations from the Kenya Revenue Authority with their own separate lawsuits.

According to the KRA, the sportsbooks owe the revenue service more than $80 million in the 20% stake tax that has been due for quite some time now. The KRA has already mentioned that it’s not afraid to use relevant tools in order to make these companies pay their due tax. In fact, the frozen accounts were one of those tools.

SportPesa has already mentioned that filing those taxes are impossible while the challenge is active, but the KRA is pressing on the issue that the individual punter is targeted.

Alternative methods of getting the tax

According to a Business Daily Africa report on Monday, the Kenya Revenue Authority had taken the issue on a more serious level and had contacted the country’s leading telecom company Safaricom. The corporation was contacted through an individual letter written by the debt enforcement manager of the KRA, Asha Salim to the CEO of Safaricom.

According to the letter, the KRA is demanding that Safaricom remits more than $80 million that the two sportsbooks owe to the agency.

The reason why Safaricom was targeted with this letter is that KRA mentions the company as the tax collector for these sportsbooks. Should Safaricom fail to deliver the funds within a given deadline, which hasn’t been disclosed, then they will be personally liable to the amount due for the KRA.

The allegation is based on Safaricom’s usage of the popular M-Pesa payment processing, which has now boomed within the country and the general African region. According to Safaricom themselves, there are 12 transactions on average being conducted per customer, and most of them are directed to mobile betting payments. This report was officialized, therefore the KRA has some basis for demanding the due tax from the telecom company.

Mixing up the finances

Auditors for SportPesa have been hard at work trying to convince the government that the due amount is being confused with customer winnings rather than customer betting stakes. Furthermore, the government is not considering how much of the amount includes payments to foreign players.

In conclusion, SportPesa is on a very tight deadline to have the issue resolved, however, both parties will be at a loss if some kind of agreement isn’t made.

The Kenyan government has been extra hostile towards the gambling industry in the recent months as it had introduced a new bill that would revoke the license of any betting or gambling operator within the country should they fail to pay due taxes before July 1st.

The clock is continuing to tick for SportPesa as it has less than two weeks remaining before the deadline. Many would think that’s exactly what the KRA wants, but it’s not that simple. By revoking the license from SportPesa, the KRA is endangering those $80 million in taxes, which are essential for the national budget of 2019-2022.