A few weeks ago, the Kenya Revenue Authority (KRA) updated the media on tax administration in the betting and gaming industry. KRA has since put in place laws and tax regimes to manage the industry, prevent companies from overstepping their boundaries, and protect participants from gambling addiction.
As of June 2022, the industry had a gross turnover of around KES 50 billion.
Kenya is among the leading countries in Sub-Saharan Africa with a growing market share in the betting and gaming industry, along with South Africa and Nigeria.
The Kenyan market offers online betting and gaming as the most popular products, as well as physical betting shops and land-based casinos.
Over 170 companies have been licensed to operate in Kenya, but some are inactive and waiting for favourable business opportunities.
Real-time tax compliance
KRA’s iTax system is a web-based, automated platform that allows taxpayers to manage their tax obligations. Users can register for taxes, file returns, pay taxes through banks, request payment plans and waivers, and monitor their accounts in real time. The system has contributed to the steady increase in collections from the betting industry in Kenya over the past five fiscal years.
Now, Kenyan betting and gaming companies are required to pay Excise Tax (7.5% on stakes) and Withholding Tax (20% on winnings) in real-time or near real-time. The rollout of this initiative began in October 2022, with a phased approach starting with top companies based on their total betting taxes revenues in FY 2021/22. The first phase involved daily tax remittances for 16 companies, and the second phase, which began in January 2023, involves data verification and compliance checks. The target for this fiscal year is KES 24 billion, and collections so far have exceeded KES 15.8 billion.
To this end, and according to Business Daily, it is expected that approximately 137 online betting services will use Safaricom’s M-PESA to pay betting taxes to the Kenya Revenue Authority (KRA) in real time. To comply with the new system, betting firms must fully integrate their systems with those of the KRA by May 12.
To meet the deadline, betting firms are required to create an M-PESA pay tax application programming interface and a data transmission service to initiate real-time tax payments. These interfaces will be made possible by Safaricom’s Daraja API.
M-PESA will likely support bulk payments by betting companies through payment integration to web and mobile applications. Besides, M-ESA was picked because it was ready for integration during the pilot phase.
According to the KRA acting Commissioner General Risper Simiyu, other providers are also welcome to participate in the system.
In the past five fiscal years, collections from the betting industry have increased steadily, from KES 4 billion in FY 2017/18 to KES 21 billion in FY 2021/22.
