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Suspension of betting levy denies KRA Sh2.7b

Zachary Ochuodho @zachuodho

Kenya Revenue Authority (KRA) has been unable to collect Sh2.7 billion tax per month accruing from the betting wins due to a court order issued by a magistrate’s court.

The orders, issued by Senior Resident Magistrate DM Kivuti at the Milimani Commercial Courts, have stopped the operations of crucial Income Tax Act sections (Sections two, 10, 34 and 35) effectively rendering KRA unable to collect taxes.

As per the Budget Statement read last year by Treasury Cabinet secretary Henry Rotich, taxes drawn from betting activities are earmarked to finance sports, art, cultural development and the rollout of the Universal Health programmes.

The order to suspend the Act follows a suit filed by Benson Irungu against Sportpesa Ltd trading as Pevans East Africa in 2014. The suit sought to stop Sportpesa from deducting and remitting taxes arising from Irungu and any other person winning any betting.

Aggrieved by an earlier order stopping Sportpesa from deducting withholding tax on winnings from betting, KRA, which had not been party to the case, sought to be enjoined as an interested party, while seeking to set aside the earlier orders.

Twist of events

The orders were subsequently overturned on March 29 allowing KRA to continue collecting due taxes from Sportpesa, among other betting companies.

However, Irungu moved to court a fortnight ago seeking orders for the stay of execution against the ruling granted on March 29.

The new orders were heard and issued in KRA’s absence and were only brought to the Authority’s attention on April 18 in the afternoon.

Meanwhile, KRA has unveiled a new system that will verify the tax compliance status of individuals from existing iTax data and thereby improve the turnaround time in getting the Tax Compliance Certificate (TCC).

The objective is to tighten the process of getting the TCC – which is mandatory for people and companies which do business with the government.

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