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A recent ruling by Kenya’s Tax Appeals Tribunal (TAT) has spared SportPesa and its owners and executives from asset seizures, bank account freezes and travel bans.
The betting firm filed an appeal with TAT following the Kenya Revenue Authority’s (KRA) move to freeze its bank accounts after issuing agency notices to lenders in 2020. At the time, KRA was pursuing a claim of Ksh 1.66 billion withholding tax, penalties and interest accrued for 2018.
The tribunal ruled that the law exempts betting firms from enforcement actions by the KRA. “The respondent’s (KRA) agency notices issued on Aug. 25, 2020, and any other enforcement notice issued in the enforcement of payment of betting tax is hereby set aside,” TAT stated.
Business Daily further reported the TAT as stating that the KRA cannot apply the enforcement actions on betting firms like SportPesa while pursuing withholding taxes.
It also ruled that agency notices and other enforcement actions contained in the Tax Procedures Act 2015 can only be used to recover money related to excise duty, VAT and income tax.
According to the TAT, a plain reading of the provision indicates that the Tax Procedures Act does not apply to the Betting Lotteries and Gaming Act (BLGA). “As such, the respondent cannot apply enforcement mechanisms set out under the TPA to enforce collection of taxes owed under the BLGA,” the tribunal stated.
The betting company has been in loggerheads with the government over unpaid taxes for years.
In May 2018, the KRA sent a demand notice to Pevans East Africa, the entity behind SportPesa, asking it to remit disputed withholding taxes from betting game-winners between 2015 and 2016. However, SportPesa cited a court order issued in 2014 that stopped the deduction of withholding tax from winners’ cash, Genghis Capital reported.
SportPesa is a sports news technology and betting brand with footprints in Kenya, Tanzania, South Africa, Nigeria, Italy, Ireland and the Isle of Man.
Its founders include SportPesa CEO Ronald Karauri, Paul Wanderi Ndung’u and Asenath Wachera Maina. Karauri is the former chairman of the Kenya Airline Pilots Association.
