Betting firms say President Uhuru Kenyatta was ill-advised in increasing gaming tax to 35 per cent of gross profits, warning that it would suffocate the fledgling industry.
The firms, through their lobby Association of Gaming Operators, said that the tax will kill mainstream firms and pave the way for underground players who will be difficult to control and regulate.
“No business can sustain a tax of 35 per cent on gross profit and thereafter a 30 per cent corporate tax,” said the operators in an open letter to the president. Until now, lotteries have been taxed at five per cent, betting firms 7.5 per cent, casino gambling 12 per cent and competitions like raffles 15 per cent.
“Unfortunately, we believe that you have been ill advised that a tax rate of this nature will achieve your desired results.”
The government said the tax is meant to curb the rapid growth of on-line gambling which hurts the young and vulnerable, and raise cash to fund sports, culture and the arts.
The association said that the tax will not curb the growth of gambling machines, which they say are behind irresponsible gaming.
Treasury secretary Henry Rotich had originally proposed raising the tax rate to 50 per cent.
MPS rejected the enhanced tax before they were overruled by the president. Mobile phone-based financial services like M-Pesa allow users to place bets, pay off losses and get winnings on their phone without the need for a bank account.
Media companies also benefit from daily advertisements from betting firms. Industry executives say about seven million out of 45 million Kenyans have registered with betting service providers.
No figures are publicly available on the industry’s profits.