KRA disputes tribunal ruling on betting wins

The Kenya Revenue Authority (KRA) has disputed Wednesday’s ruling by the Tax Appeals Tribunal (TAT) on the definition of winnings by betting customers and has since filed a notice of appeal.

In a statement issued earlier on Monday, the tax man expressed its shock on the tribunal’s interpretation of customer winnings which sits against High Court’s clarity on the definition as per its ruling passed earlier in the year.

“KRA disagrees with TAT’s decision for among other reasons, the fact that it departed from the decision by Justice Hatari Waweru’s in a Meru High Court Case in which the learned judge had found that there was no ambiguity in interpretation of the term “winnings” as defined by the Income Tax Act,” read part of the statement.

The taxing of customer winnings sits at the heart of KRA’s discontentment with the November 6 ruling where the authority differs with tribunal on what entails customer winnings.

According to KRA, the withholding tax on won customer bets should include amounts staked by participants while the tribunal calls for the charging of the positive difference between returns and stakes.

In the bigger picture, the deepened row which also pits the KRA against Betin and SportPesa has its foundation in the Finance Bill, 2018 which proposed the entry of a 20 percent withholding tax on customer winnings from bets, a provision later incorporated into law.

At the same time, the row is intertwined with KRA’s claim of over Ksh.60 billion from more than 20 betting firms including SportPesa and Betin over their withholding of the tax’s remittance.

The two betting firms have since shut operations in Kenya citing the hike in taxes and the unresolved tax disputes.

KRA’s opposition to the tax tribunal ruling further escalates the long standing dispute on the taxation of gaming revenues and comes ahead of the implementation of a new 20 percent excise charge on customer stakes following the adoption of the proposal in the Finance Act, 2019 which has since been assented to by the President.