Gambling firms contributed KRA Sh4.7 billion, Commissioner General John Njiraini reports
Kenyan gambling firms have since June 2014 contributed KRA Sh4.7 billion to state coffers, Kenya Revenue Authority Commissioner General John Njiraini told lawmakers this week at a hearing on gambling reform conducted by Parliament's Labour and Social Welfare Committee.
Njiraini revealed that eight major gambling companies in the country will help more than double the taxes from the sector from Sh1.2 billion in 2015/16 to Sh3.8 billion in the current financial year, and will have cumulatively given KRA Sh4.71, based on the companies' self-assessments.
The Commissioner General observed that this figure could be higher, as revenues from casinos and bookmakers are not captured.
He quoted statistics from the Betting Control and Licensing Board which put the number of registered and licensed casino operators at 50 and bookmakers at 25. He revealed that commencing in January this year the Authority has been collecting 7.5 percent of gambling companies' revenue after winnings have been paid.
Parliament is considering proposals to double betting tax to 15 percent while lottery tax will increase five times to 20 percent. In addition, if the proposals go through, gaming (casino) tax will increase from 12 percent to 20 percent, and players could face a 20 percent withholding tax on their winnings.
Njiriani warned, however, that consumers may react adversely, actually reducing tax revenues for gambling:
"Our experience indicates that high tax rates even for commodities considered as socially undesirable ultimately lead to reduced demand," he said. "It may also help develop an underground economy and promote tax evasion."
The Commissioner General went on to opine that it was important for lawmakers to compare proposed taxes with those levied in other nations in order to avoid the possibility of transfer pricing by operators.
If tax rates in Kenya are high, operators could "ride" on foreign gamblers living in countries with a favourable regime, leaving KRA with reduced tax revenue, he warned.
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