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Revised Finance Bill 2024 draft aims to Introduce VAT on Gaming and increase Tax on Stakes

New proposals in the draft Finance Bill, 2024 suggest that gamblers in Kenya may be required to pay the government Sh20 for every Sh100 wagered, with plans to introduce a 16% VAT on betting and raising the excise tax on stakes to 20 percent in a bid to deter excessive gambling. Gaming

The newly revised taxes in the bill include;

20% Excise Duty

The draft Finance Bill, 2024 contains the proposal to increase the excise duty for betting, gaming, lottery (excluding charitable lotteries) and prize competition from the current 12.5 percent to 20%, which is expected to be reviewed and approved by Parliament before the end of June.

“The first schedule to the excise duty Act is amended by deleting the words twelve-point five percent and substituting thereof the words twenty percent,” states the National Treasury in the draft Bill.

The excise tax on betting stakes was raised from 7.5 percent to the current 12.5 percent in July last year as part of the government’s crackdown on the betting industry. Finance Bill 2024 Gaming VAT Stakes

20% Withholding Tax

Additionally, a 20 percent rate will be applied as withholding tax on all winning bets, as required by law for betting firms to remit to the Kenya Revenue Authority (KRA) by the 20th of the following month.

Read Also: BCLB Directs Betting Firms To Renew Licences, Migrate To New System!

Apart from targeting gamblers, the government is also focusing on betting companies, proposing two new taxes under the Gambling Control Bill, 2023, which is currently under parliamentary review.

15% Gambling Tax

These new taxes include a 15 percent gambling tax on a firm’s gross gaming revenue and an additional one percent monthly levy on the same revenue, although recommendations have been made to reduce the gambling tax to 13 percent and eliminate the one percent levy.

16% VAT on Gaming

The finance bill 2024 proposes to delete the VAT exemption for betting, gaming and lottery services. They would now be subject to VAT at the standard rate of 16%.

The tax authorities are also looking to raise excise duty from 15% to 20% on telephone and internet services, money transfers through cellular phone service providers, and fees for money transfer services. This could potentially harm the gambling industry in the country, as easy access to gaming and financial transactions relies heavily on mobile money and internet services.

Increased Gaming Taxes in Kenya

The moves aim to reduce the attractiveness of betting to millions of Kenyans, particularly among the youth and unemployed individuals who rely on gambling as a form of income.

BCLB data shows that revenue for betting firms dropped by 80 percent to Sh60 billion in the 2021/22 fiscal year, down from Sh299 billion in the year ended June 2019.

Implementing the new tax rate will lower the amount wagered by gamblers, consequently decreasing potential winnings from bets. Finance Bill 2024 Gaming VAT Stakes

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