President Uhuru Kenyatta asked Parliament to approve a proposal to raise taxation on betting companies to 35 per cent.
He declined to assent to a proposal by the law makers to retain taxation at 15 per cent in the Finance Bill 2017. The National Assembly will consider the recommendation before the House goes on recess.
MPs had earlier shot down National Treasury Cabinet Secretary Henry Rotich’s amendment to the Finance Bill 2017 that had sought to tax gambling earnings by 50 per cent.
Mr Kenyatta’s decision is expected to trigger a new round of lobbying by the companies involved in the lucrative betting industry, whose earnings are the target of the new taxation measures as Treasury grapples with a widening budget deficit.
“President Kenyatta has returned the Finance Bill 2017 to Parliament, recommending reinstatement of the betting taxes clause increase to 35 per cent from 15 per cent,” said State House spokesman Manoah Esipisu.
The proposals, which are likely to sail through the House because the President’s Jubilee Party has a majority, have huge ramifications for the gaming industry.
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Taxes payable by gaming and betting firms would more than double, presenting a real possibility of curtailing the growth of the sector on which many young people rely for their livelihood in the face of soaring unemployment.
There has, however, been counter-arguments about the industry, which has been accused of promoting social ills, especially among the youth, who are the biggest gambling constituency in the country.
House majority leader Aden Duale will now re-introduce the Bill for discussion as a matter of urgency because it is part of the law that legitimises levies and taxes.
In the unlikely event that the Finance Bill is shot down, the Kenya Revenue Authority (KRA) would not have the mandate to collect any taxes from July 1, when the new financial year begins.
It is expected that the betting firms will seek to influence the outcome because the MPs’ decision will be final.
Should they vote to retain the old taxation regime, President Kenyatta would be bound by the outcome and would have to sign the Bill into law.
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SportPesa declined to comment on the President’s decision, asking for more time to assess the implications of the proposed law.
Previously, the firm had said the Rotich proposals would kill the gambling sector.
Rotich cited a need for stiffer regulation of the sector as the reason for the higher taxation proposals when he delivered his budget speech on March 30.