MPs protest court breach in Sh61bn betting tax demand

The Kenya Revenue Authority (KRA) is demanding Sh61 billion from betting companies amid protest by MPs that the State defied courts in denying the gambling firms licences.

The KRA said it submitted the list of 72 non-compliant betting, lotteries and gaming firms to the Betting Control and Licensing Board (BCLB) when the regulator demanded to know the tax compliance status of the companies.

Seven out of 72 registered betting firms have signed payment plans with the KRA while 27 have compliance issues, the Senate heard Wednesday.

The Senate Committee on Justice, Legal and Human Rights summoned the BCLB and Interior Secretary Fred Matiang’i for acting against court orders.

The committee chaired by Samson Cheragei (Nandi) said it reeks of impunity for the regulator to suspend operations of the companies as well as to deport some of their directors when the matter was pending before the High Court.

The committee has summoned Dr Matiang’i and the regulator to appear before it this morning.

“We want them to tell us why they have decided to treat court orders as tissue paper,” said Mr Cheragei, adding the committee will investigate defiance of court orders in betting licence row.

Betting firms, including SportPesa, Betin Kenya and Bet Pawa, had court orders stopping the withdrawal of their permits following the tax rows.

The State through the BCLB ordered Safaricom on July 10 to suspend M-Pesa payment systems and SMS codes for 27 betting firms including SportPesa and Betin because their operating licences for the year starting July 1 were not renewed.

KRA deputy commissioner Elizabeth Meyo told Senators that the dispute with betting firms arose after the enactment of the new law that changed the definition of bet winnings, placing new demands on betting firms that are expected to withhold 20 percent of the winnings.

Previously, the betting firms were expected to withhold 20 percent of the positive difference between winnings and the amount staked. But the current law demands the firms withhold 20 percent of the winnings irrespective of whether the bets surpass the winnings.

SportsPesa chief executive Ronal Karauri told the committee the court allowed them to operate pending the conclusion of the tax dispute.

Mr Karauri said the court ordered that no action should be taken against the betting firms pending the conclusion of the court case but the KRA and BCLB disregarded the same.

“SportsPesa has transitioned from small domestic taxpayer to a large domestic taxpayer having paid combined Sh17 billion in taxes,” he said.

The KRA is demanding Sh21 billion from SportPesa.

“This definition removed provision for deduction of amounts staked. One of the key mandates of KRA is to collect tax revenue. We don’t issue licences,” Ms Meyo said.

Besides the permit freeze, deported 17 foreign directors of the betting firms including nationals of Bulgaria, Italy, Russia and Poland following the licensing row.