Betting companies such as Betin and Sportpesa have received a shot in the arm from 12 Members of Parliament who have strongly condemned the government for revoking operating licenses.
Led by Kakamega Senator Cleophas Malala, the lawmakers said the allegations that the betting companies have not been remitting taxes are baseless and unfounded.
Malala said the government directive has rendered some Kenyans jobless. He observed that taxes from the two giant industry players form a big percentage of the revenue collected.
According to Malala, taxation of customer’s stakes is taxation of capital and represents a violation of the existing law, which only taxes the income tax.
The Senator added that the deportation of some gaming operators was a blatant violation of basic human right since they were duly registered.
Another MP, nominated Senator Isaac Mwaura, said Sportpesa does not only sponsor sports but has been supplying people with disability with sun-cream lotion and braille materials for the blind.
According to Mwaura, some individuals who are among gaming competitors are miss-advising President Uhuru Kenyatta.
“This notion is coming from certain individuals who also happen to be competitors in the same business,” he said.
Nominated MP Godfrey Osotsi added: “We will not allow AFC and Gor Mahia to die because of someone who is mismanaging the sector.”
On his part, Alego Usonga MP Samuel Atandi said most gaming companies have fully complied to corporate and income taxes.
“Most of these betting companies have complied with both corporate and gaming tax. The problem is with the taxation on winnings,” Atandi said as quoted by the Star.
“KRA has to open negotiation with these companies so that they can agree on an amicable solution to solve this matter.”
The formula used to calculate 20% tax on bets
This comes as the Association of Gaming Operators – Kenya (Agok) on Tuesday published a full-page spread in a local daily outlining the formula used to comply with the government order.
Agok outlined that the betting firms use betting odds, which are normally in decimal format, to calculate winnings. The odds figure is then multiplied by the amount the gamer placed as a bet (stake) and the result is considered as winnings. This is referred to as fixed odds betting.
“A Sh10 bet at odds of 3.0 would return Sh 30 (Sh20 of winnings + Sh10 stake) if successful. If unsuccessful you lose your Sh10 stake. The calculation is now winnings = (odds x stake) – stake,” the statement outlined.
The tax is then imposed on the winnings as above calculated.
“We concur with the government on tax collection to meet its agenda but the methodology and interpretation of the term winnings gives the operators a bad image especially with their customers who do not understand that the contentious interpretation is from the government. We feel this will have a negative impact on tax collection,” Agok CEO Aloyce Omondi wrote in part.
“KRA has instructed BCLB not to renew licenses of some betting companies based on their interpretation of winnings which distorts the expected revenue, even while the matter is yet to be settled by the Tax Appeals Tribunal.”