The High Court has issued an order halting the deduction of a 12.5 percent excise duty on bets.
Justice Patrick Otieno issued a directive to the Kenya Revenue Authority (KRA), instructing them to refrain from demanding the contested tax until the application brought forth by a petitioner, Edward Okwama, is heard and resolved.
Additionally, the judge directed betting companies, Milestone Gaming Limited and Standard Global East Africa Limited, to refrain from deducting the 12.5 percent excise duty from gamblers.
Milestone operates a betting platform under the Sportpesa brand, while Standard Global provides casino services on Sportpesa’s website.
“Pending the hearing and determination of the application inter partes, there be and is hereby issued a temporary conservatory order restraining first and second respondents (Milestone and Standard Global) from deducting 12.5 per cent excise duty from the petitioner and other players/ wagers as provided for under paragraph 4A of part II of the first schedule of the Excise Duty Act of 2015,” ruled Justice Otieno.
In the case, Okwama has sued Milestone, Standard Global, KRA, and the Attorney General. He argues that the existing law is unjust since it enforces a uniform deduction regardless of an individual’s winnings or losses.
The betting enthusiast also contends that the law fails to address the issue of refunding the deducted tax when sporting events are disrupted by unforeseen natural events like rainfalls or storms.
“The problematic effect of this provision is that the 12.5 per cent excise duty is levied under paragraph 4A part II on the applicant and other sports betting fans and players when they place a bet or play, notwithstanding if they win or lose their money.”
He laments that the current tax structure is unduly severe, leading to a scenario of double taxation where gamblers are required to pay both the 12.5 percent excise duty and an additional 20 percent withholding tax on their winnings.
“The multiplicity of taxes levied on sports fans, players, and enthusiasts in the gaming industry is in contravention of the international general principle of neutrality, efficiency, certainty, simplicity, effectiveness, fairness, and non-double taxation in a tax regime,” court papers read.
Justice Otieno directed the petitioner to provide formal notice to the betting companies, the Kenya Revenue Authority (KRA), and the Attorney General (AG) within a span of 14 days. The case is scheduled for mention on September 21st.
