New Tax Hike for Betting and Gaming Along with Stricter Advertising Rules Proposed in Upcoming Legislation

The Cabinet Secretary for National Treasury and Economic Planning proposed significant changes in the taxation of betting and gaming through the Tax Laws (Amendment) Bill 2024. The most notable change is an increase in the excise duty applied to betting and gaming activities, raising the current rate from 12.5% to 15% of the total amount wagered or staked.

This means the excise rate charged on betting, gaming, prize competitions, and lotteries will see a 2.5% increase based on total customs value. Stakeholders have noted that this hike could lead to higher prices for consumers.

The full list of tax changes proposed in the bill indicates a broad impact across several sectors. The new rates for various excisable services are as follows:

Telephone and Internet Data Services

• Previous Rate: 15% of excisable value
• New Rate: 20% of excisable value

Fees Charged for Money Transfer Services by Banks, Money Transfer Agencies, and Other Financial Service Providers

• Previous Rate: 15% of excisable value
• New Rate: 20% of excisable value

Betting

• Previous Rate: 12.5% of the amount wagered or staked
• New Rate: 15% of the amount wagered or staked

Gaming

• Previous Rate: 12.5% of the amount wagered or staked
• New Rate: 15% of the amount wagered or staked

Prize Competition

• Previous Rate: 12.5% of the amount wagered or staked
• New Rate: 15% of the amount wagered or staked

Lottery

• Previous Rate: 12.5% of the amount wagered or staked
• New Rate: 15% of the amount wagered or staked

Fees Charged by Digital Lenders

• Current Rate: 20%
• New Rate: No new rate proposed; remains 20%

The Committee reviewing the bill has acknowledged that while a higher excise duty is likely to yield increased revenue for the government, it could also discourage participation in betting activities, a measure that may be deemed commendable in light of ongoing concerns about gambling addiction.

In addition to the tax hike, the new legislation aims to tighten regulations on advertising for betting and gaming. An excise duty will now also apply to advertisements related to these activities on digital platforms, including social media, alongside existing duties applied to traditional media outlets such as television, print, and radio.

The proposed legislation has sparked robust discussions among stakeholders. While the government defends the tax increment as a necessary step to tackle social challenges linked to gambling, critics warn that raising taxes may drive betting operations underground or push Kenyan gamblers towards unregulated offshore platforms. Additionally, advertising restrictions could stifle the ability of legal operators to market their services effectively, potentially hampering revenue growth within the regulated sector.