Kenya’s 20 percent excise duty makes a come back

Kenya’s treasury has reintroduced the controversial 20 percent tax on wagers, which caused furore among the nation’s operators in 2019, via its 2021 Finance Bill.

Despite the goal of securing more taxes for the state, levies on bets placed (rather than on the money lost to bookmakers) have become highly unorthodox in regulated markets – for their tendency to hand a meaningful margin advantage to unlicensed operators – and was rescinded in Kenya last year for this reason.

“Excise duty on betting shall be twenty percent of the amount wagered or staked,” the bill stated tersely.

The move will add a significant burden on the licensed sector, greatly expanding the duties it is already eligible to pay. Currently, betting companies are taxed on the gross gaming revenue at a rate of 15 percent, as well corporation tax on their profits at 30 percent.

Already squeezed, removing cash from the market ex-ante is indirectly likely to reduce revenues. Indeed part of the government’s aim may is to disincentivise betting and even punish gambling companies who have often been criticised for reckless profiteering at the expense of Kenyan youth. However the policy was rescinded for fear of driving up illegal betting activity.

Yet within days of the policy’s repeal last year, the country’s treasury cabinet secretary Ukur Yatani had already vowed that “following various consultations and in line with the government’s commitment on mitigating against the social vices associated with betting activities, the National Treasury and Planning will be proposing to the National Assembly, the reintroduction of the excise duty on betting within the next six months.”

The legislation must be first considered by Kenya’s parliament: initially the Finance Committee of the National Assembly and then by the Assembly and Senate, before requiring the signature of President Uhuru Kenyatta.