In setback for gaming firms, Uhuru declines to assent Financial Bill

President Uhuru Kenyatta declined to assent to the Finance Bill 2017 after Members of Parliament deleted the provision on increase of gaming tax to 50 percent from the current 15 percent.

The development sets the tone for a fresh tax tussle for the industry that has witnessed steady growth after Parliament earlier shot down the proposal to amend the Betting, Lotteries and Gaming Act.

The President has recommended for an increase of gaming tax by 35 percent as opposed to the 50 percent proposed by National Treasury Cabinet Secretary Henry Rotich.

In his budget speech Rotich, the chief proponent of the 50 percent tax rate rise, said that the hike was meant to discourage gambling, with the additional proceeds being used to fund cultural and arts programmes across the country.

Rotich argued that the expansion of the industry has had negative social effects on the society, especially on the youth and vulnerable members of society.

At the time, the proposal sparked a major uproar from betting firms with the local sports fraternity that has been the direct beneficiary of the blossoming industry also joining the loud chorus against the punitive tax.

Stakeholders from the sports sector feared the hefty tax levy was bound spiral down to a decrease or, possibly, an end to direct investment by gaming firms on constituent clubs.

National federations including Football Kenya Federation (FKF) and the Kenya Rugby Union (KRU) as well as Kenya’s top tier football management body, KPL, led the heavy criticism as they called on the State to review the proposal.

It followed a series of joint meetings between the federations and club chiefs that sought to petition against what could have potentially ended multi-million sponsorship deals struck between them and betting firms.

The federations confirmed having received warnings that contract terminations were the inevitable spillover effect should the steep levy be implemented.

-Additional reporting by Matthews Mutai.