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KRA And SportyBet In Ksh 5Billion Tax Dispute

The Kenya Revenue Authority has gone after SportyBet over a Ksh 5 billion Tax Bill, intensifying its fight against incorrect taxes by betting companies in the multi-billion-dollar industry. KRA Sportybet

Meanwhile, SportyBet Ltd. has gone to court after KRA had all its accounts in six banks and Safaricom pay bill numbers frozen, claiming it has affected all its operations in the country. It is unable to pay salaries, rent, and other duties due to this.

The respondent currently employs over 20 Kenyans and the continued freezing of its bank accounts on the basis of the preservatory orders issued herein has forced it to find alternative but costly means of meeting its salary obligations and other contractual obligations to third parties.

The company has been operating in Kenya for the last eight years and has been consistently paying its taxes, even obtaining a tax compliance certificate for each year.

The KRA did conduct an assessment of the firm’s tax compliance and found a liability of Ksh 5 billion, thus prompting the move to the court in line with the Tax Procedures Act seeking preservation of the firm’s bank accounts pending the final audit. This is granted for a period of time before moving to court formally.

This comes after KRA initiated a crackdown on betting firms, which eventually revealed Sportpesa was liable for Ksh 95 billion, which the firm contested.

Read Also: GRA to Implement 10% Withholding Tax on Gaming Wins this Month

Through their lawyer, KRA did tell the court that SportyBet under-declared their incomes for the period between 2018 and 2021 and thus needed preservation of the funds to avoid being transferred out of the country. Upon analysis of the tax information collected from the firm’s bankers and pay bill accounts, it was noted that there was a huge variance between deposits and self-declarations. Additionally, SportyBet had no known assets in the country except the money in the six bank accounts and pay bill numbers.

In response, the betting firm told the court that their platforms are fully integrated with the KRA I-tax System Integration Data Report, which provides real-time information. KRA did issue three assessment notices; the latest one was in August, thus refuting claims the company wanted to close its Kenya operations and that they are serial defaulters. Also, all its directors are Kenyans, including one who is a foreigner.

In connection to variances, SportyBet did explain that there were internal transfers that do happen in their various pay bills, and counting all these transactions will result in counting the same fund many times over. Also, it is possible for a customer to deposit and not utilize the whole amount as a stake. This pay bill transaction is not a net income.

Finally, the firm claims KRA incorrectly used Ksh 7.3 Billion as the amount for computing withholding tax on winnings. The correct gross payouts are Ksh 1.9 billion as per the Betting Control and Licensing Board returns.

The freeze was extended by the court until it rules on the application, on which day the parties will be notified.

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