Casino operators have opposed a new levy on casino winnings imposed by the Kenya Revenue Authority (KRA). The 42 operators filed a petition in court via Kipkenda and Company Advocates and the high court has stopped the KRA from imposing the law pending a hearing.
The temporary order was issued by Justice David Manjanja and the KRA will not be able to collect any new levies until the case has been determined. It is set to be heard on February 27, 2014.
Operators Argue the Levies Will Harm Business
The new law would require operators to deduct 20 percent on winnings from gambling to pay to taxes. The 42 casino operators argued in their petition that the levy on gambling winnings in Kenya would severely harm the gambling industry in the African country. In addition, the lawyers for the operators have argued that in turn it will harm the tourism industry in the country as those who wish to combine a holiday with gambling will go elsewhere.
Operators have also objected on the grounds that the National Assembly did not take into consideration the proposal of the Commission on Revenue Allocation which recommended the sharing of revenue with the National and County governments.
"The amendments would drive away gamblers especially foreigners who will choose to take their money elsewhere in the neighboring countries such as Tanzania which do not impose withholding tax on players from winnings gained from betting and gaming," commented lawyer Patrick Wachira.
Furthermore, the advocates have argued that stakeholders in the gambling industry were not consulted by the National Assembly for their views on the matter before the law was amended to introduce the levy.
"The casino operators were not given audience to air their views before the law was amended as required by the Constitution," Wachira argued in court.
Levies in Effect Since January
The amendments were imposed in January 2014 with casino operators required to remit the tax to the KRA the following month. The President approved the Finance Act 2013, Act number 30 of 2013 which stipulated that income tax should include gaming and betting winnings and should be liable for 20 percent tax.
Based on an audit done by PwC that indicated that Kenyan gambling generated Sh1.7 billion ($20 million) in 2013, it is expected that in 2014 revenue will be up to Sh1.98 billion ($23 million). This means that government will make Sh432 million ($5 million) in annual taxes.