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By Phyllis Muchoki
The Kenya Revenue Authority (KRA) was last week given the nod to enforce the collection of winnings or betting tax using agency notices, with the court noting that such incomes are subject to taxation.
High Court judge Alfred Mabeya said winnings or betting tax is an income and is subject to taxation and the tax rates prescribed in the Income Tax Act.
The judge made the decision in a matter filed by Pevans East Africa, the previous owners of betting firm SportPesa.
The KRA was demanding Sh1.6 billion from the betting firm but SportPesa argued that the taxman had no powers to use agency notices to collect winnings, an argument that was upheld by the Tax Appeals Tribunal.
KRA had moved to the High Court after the Tax Appeal Tribunal through its Judgement dated 16th April 2021, held that the KRA had no powers to use Agency Notices to collect winnings or betting tax of Sh1, 661, 350, 351 from Pevans East Africa Limited.
The Tax Appeals Tribunal had further stated that the only resort the KRA had was to file a civil suit for recovery of unpaid betting taxes.
In agreeing with the KRA submissions and overturning the decision of the Tax Appeals Tribunal, Justice Alfred Mabeya observed:
“Betting, Lotteries, and Gaming Act (Betting Act) does not provide an enforcement mechanism and further winnings or betting tax is a subject of income Tax and its collection is by way of withholding tax, which is subject of the Tax Procedures Act, 2015.
As such the KRA’s action of issuing Agency Notices to collect the betting tax is within the law,” noted the Commissioner of Legal Services & Board Coordination, Paul Matuku.