Gamblers will give more money to the taxman from every betting stake in line with legal changes that were signed into law this month, marking the latest push by the State to cut the gambling craze.
Punters will now forfeit 15 percent of every betting stake, up from 12.5 percent in line with the Tax Laws (Amendment) Act, 2024 that became law last week. This means that for every Sh100, the Kenya Revenue Authority (KRA) will take Sh15 from the current Sh12.5.
Increasing excise tax on betting stake is meant to cut the appeal of the craze, which has turned into an addiction for millions of Kenyans who have made it a source of livelihood.
The government through the Finance Bill, 2024 initially tried to introduce a 20 percent excise tax on betting or gaming services offered through a digital platform by non-resident gaming firms.
The Bill also sought to introduce Value Added Tax (VAT) on betting at the rate of 16 percent besides increasing excise tax on stakes to 20 percent.
The proposed higher taxes died after the Bill was rejected in the wake of deadly countrywide protests. The government then proposed a 16 percent VAT and excise tax of 20 percent on betting stakes via the Tax Laws (Amendment) Bill, 2024.
The excise tax proposal was subsequently amended to 15 percent which is now in force while the VAT measure was deleted.
Kenya is currently home to the highest number of young gamblers at 76 percent of the youthful population, ahead of bigger economies like South Africa and Nigeria.
A joint report done by the Central Bank of Kenya, Kenya National Bureau of Statistics and other firms shows that 40.4 percent of Kenyans aged between 18 years and 45 are actively betting, underscoring the gambling craze that the State is trying to fight.
“Younger, urban, and educated individuals are more likely to invest in gambling, possibly due to optimism or a perceived income opportunity,” State agencies say in the Financial Access Report, 2024.
Besides the tax on betting stakes, punters also pay a withholding tax (WTH) of 20 percent for every winning bet that betting firms withhold and remit to KRA daily before midnight.
Increased taxation has not deterred gamblers, with more betting firms trooping into the market in the quest for a slice of the billions of shillings that punters splash on the craze.
There are currently 200 betting firms licensed to operate, up from 100 three years ago despite the onslaught that has also targeted the companies.
Betting firms pay a 15 percent tax on gross gaming revenue and a corporate tax of 30 percent on profits. The firms are also required to remit the taxes every day by 1:00am.
Last year, there was an attempt to introduce two new charges on betting firms, a gambling tax at the rate of 15 percent on the gross gaming revenue and a further one percent levy every month on the same revenue.
