FKF in bid to save betting companies from 50% tax cut

The national football governing body Football Kenya Federation (FKF) has petitioned the government to consider reviewing a recent proposal to levy a 50 percent tax on betting companies.

The proposal, contained in the Finance Bill 2017 and announced in the Budget Statement recently read by the National Treasury Cabinet Secretary Henry Rotich, seeks to increase the current tax rate payable under the Betting, Lotteries, and Gambling Act to 50 percent.

However, in a swift stakeholder petition, FKF has described the taxation proposal as stringent and likely to stifle the continued development of sport.

FKF President Nick Mwenda warned the proposal could wipe out crucial investments that have been put into local clubs by betting companies.

In place of an excessive tax regime, Mwendwa has expressed FKF’s commitment to mediate a win-win position that will see betting companies continue to play a sustainable role in sporting development.

“We support the government’s proposal to introduce a uniform tax across the board on betting, lottery, gaming, and competition industry.

“However, we feel it is important to acknowledge the growth of sports marketing as an industry and also acknowledge that worldwide the private sector plays a big role in developing sports outside what is considered as national assets such as the national, youth and women’s teams,” Mwendwa said.

The federation, he said, is moving with speed to engage the government with the aim of reviewing the proposal in a bid to ensure that implementation of the same accommodates huge investments in sports sponsorship for national teams, local clubs, and other positive multiplier effects.

The new proposal means the industry will be taxed half of its gross earnings before expenses including marketing costs and thereafter subjected to a further 30 percent on net profit after deducting all other expenses.

If implemented, sports betting firms may be forced to review their engagements with clubs or federations due to budgetary reasons and mostly because they will not be able to directly negotiate for key marketing rights.

FKF is currently in charge of managing the national teams and over 6000 clubs in the country. The federation has been seeking sponsorship from the private sector in order to grow the sport at the national and grassroots level.

“The implementation of the proposed National Sports, Culture and Arts fund should not curtail the unprecedented growth and beneficial sports sponsorship drive undertaken by the betting, gaming and lottery enterprises.

Whereas the National Sports, Culture, and Arts fund is a noble idea it captures aspects that don’t reflect sporting activities. In this perspective, we will engage the government for a further discussion on the best way to manage sports sponsorships,” he emphasised.

He proposed that the Government reviews the Vision 2030 goals in order to initiate sports lottery as a tool to raise funds for development of sports.

“It is because of this and the floated idea to have a newly created National Sports, Culture and Arts fund to support the development of the same that FKF is engaging the government. This is in an effort aimed at ensuring implementation of the tax proposal does not largely affect companies that proactively support football.

“Further, it is the federation’s view that betting companies have played and continue to play a key role in the development of Kenyan football despite dwindling fortunes brought about by stiff competition in the market.

“Kenyan football development has continued to suffer stifled growth arising from lack of development resources, which include sufficient financial allocations; however, the leading role and confidence exhibited by betting companies has heralded a new dawn for the game among other sporting disciplines,” he underscored.

The invent of local betting firms has led to an influx in moneys channeled toward sport in the country.