Stakeholders Warn Against the Proposed VAT Act in Kenya

Kenya has one of the biggest iGaming markets in Africa with a staggering GGR worth millions of dollars and is stated one of the biggest markets behind South Africa and Nigeria in terms of market size. 

The East African nation is currently facing excessive taxation challenges and the proposed Finance Bill on VAT Act along with excess taxation has forced notable brands to exit the Kenya market. 

The Current State of Taxing and the Proposed Finance Bill 

The proposed Finance Bill is mandating bookmakers to withhold 20 percent winnings and remit it to Kenya Revenue Authority. In addition, Bookmakers are taxed 15 percent Gross Gaming Revenue; while excise duty increased from 7.5 to 12.5 percent in two years and is proposed to rise to 20 percent. 

The proposed deletion of paragraph 17 from Part II of the First schedule of the VAT act if implemented will authorize Operators to start paying for VAT added to other taxes. 

Notable Brands leaving and the Effect on the Country

Kenya has one of the highest taxing rates in African iGaming industry and this had led to certain operators exiting the Kenyan market. Betsafe shut down operations in May 2024, due to heavy taxation. 

Also, BetWay, Betin and Hollywood Bet have left for same reason. With excessive taxing becoming a major concern the government shouldn’t be introducing the VAT Act to an industry which already has much taxing.  The departure of betting companies will be detrimental to the economy in terms of loss of revenue for the government and would render hundreds of its citizens jobless.   

Flashpoint 

However, the excessive taxation and the proposed Act has been poorly received by stakeholders in the industry, to get further insights on the topic, betting news site SportsBoom.com sat down with the Operations Manager of Palms Bet, Purity Wahiu, she said “The proposed VAT Act in Kenya's gambling industry aims to provide a more stable and predictable revenue stream for the government. And it also reflects a comprehensive approach to reshape the financial landscape of the gambling industry in Kenya, balancing economic growth with responsible gambling measures.”

To find out if the proposed VAT Act is good or bad for the iGaming industry in Kenya, she opined that ‘The increase in VAT on the gambling industry in Kenya has both positive and negative implications.

Positive Effects

Regulatory Intent: “Higher taxes are part of the government's strategy to curb illegal gambling, addiction, especially among vulnerable groups.”

Revenue Generation: “The government aims to increase its revenue collection through the VAT on betting, gaming, and lotteries services.”

Image Credits: Linkedin 

Negative Effects

Industry Growth: “Kenya already has some of the highest tax rates on betting in the world. Further increases are unreasonable, unfavorable might deter investors and could negatively impact the industry due to potential market exits.”

Market Impact: “Increased taxation could lead to a rise in unlicensed gambling and illegal gambling as operators and consumers seek alternatives to avoid higher costs.”