Imposition of a 50% tax on the gross revenue of betting companies in Kenya is likely to be a banana skin for the players in the sector.
In the recently proposed 2017/2018 national budget, Kenyan government has increased the taxation of the betting and gaming companies by over 600%.
In view of this, several scenarios are likely to be seen in the next months. Most possible, is the fact that some of the companies may shut down business in Kenya and relocate elsewhere.
In countries with favorable taxation terms compared to Kenya, several betting and gaming sectors currently in Kenya may opt to shut down and open in another country.
Director Mcheza, a gaming and betting company Julie Gichuru on Monday called on President Uhuru Kenyatta to step in and have the matter re-looked.
Mrs. Gichuru argued that the different players in the sector are ready to be taxed but a 50% tax was only killing their investment.
The betting industry globally generates a maximum of between $700bn and $1tn a year according to a 2013 BBC estimate report.
Additionally, tax generated from the sector is expected to dip with cease of operations by betting companies. In the year 2016, Kenya Revenue Authority collected over sh4 billion from the sector.
Football, rugby, basketball, boxing and motorsport leagues sponsored by the sector are also likely to suffer with the huge taxation imposed on Kenyan betting companies.
Online betting firms that are not be subject to Kenyan tax laws are expected to reap big as a huge number of gamers are expected to change camp which in the end, will hurt Kenya’s betting and gaming sector.