Kenyan gamblers may soon have to part with 20% of their bets as part of a newly proposed tax initiative rolled out by the government.
The increase in taxes intends to curb gambling and betting in the East African country.
Should the proposal be approved by members of parliament, all betting firms will be obligated to retain Sh200 of every Sh1,000 wagered by customers. Regardless of whether the bet was winning or losing wager.
The new tax structure, once passed by the government, will form part of an amended Excise Duty Act of the Finance Bill for 2022. The government said it hopes to raise new taxes to the tune of Sh50.4 billion to boost the country’s Sh3.31 trillion financial coffers for the new financial year.
Concern for Gambling Youth
According to Treasury Cabinet Secretary Ukur Yatani, the government is concerned about the negative effects of gaming and betting in Kenya from a social standpoint. He said these activities can be harmful, especially to the country’s youth.
The latest tax hike was first introduced in 2019. However, betting firms have up until recently managed to appeal successfully to lawmakers to stay on the move.
What it Means for Gamblers
This means that 2022 is the second year in a row that the government is seeking to impose a 20% tax hike on bets wagered.
If passed, the tax hike will come into effect in July 2022. Gamblers will f also pay an additional 20% levy on all winnings. These winnings will be paid to Kenya’s revenue service.
What this means for gamblers, is that a win of Sh10,000 will see only Sh8,000 returned. The balance of Sh2,000 will be paid to the KRA.
Betting a Huge Tax-Focus
The local gambling and betting industry has over recent years become the main target for the government’s collection of so-called “sin” tax.
Sports betting has become exceptionally popular among the county’s youth. Some have even gone as far as funding their addition with loans from banks and other financial institutions.
Many young people consider gaming and betting not only entertainment but also a source of monthly income.
Gambling Remains Popular
Despite the higher taxes that have been instituted in the past, gambling and betting remain a favorite pastime in the country. According to Safaricom, bets placed via M-Pesa increased by a massive 69% in the six-month period ending in September 2021.
The bets received via M-Pesa accounts jumped to Sh347.8 million in a question of only six months.
While the full scale of gambling in Kenya remains unclear, given M-Pesa’s dominance across the local market, the operator is regarded as a true reflection of the state of the industry in the East African country.
Biggest Tax-Hike Yet
Also on the rise has been the number of new betting firms licensed to do business in the country. Last year alone, this number increased by 31.5%.
According to the Betting and Licensing Control Board (BLCB), in 2020, the number of licensed operators increased from 76 to 100. This has also spurred investment interest in the country.
Other services and goods slapped with “sin” tax include sugary drinks, cigarettes, and alcohol.
As far as alcohol goes, the Finance Bill of 2022 proposes to raise the tax on beer by Sh12.15 per liter, wine by Sh20.80 per liter, and spirits like rum, vodka, whisky, and gin, to Sh335.80 per liter.
A unit of cigarette (with a filter) will be taxed at Sh3.83, which marks an increase of Sh0.38.
Sugary drinks like fruit juices will increase to Sh13.30 per liter, while taxes on sweets and chocolates will be increased to Sh40.37 and Sh242.29 per kilo.
