Tax changes and potential of gaming in Kenya under the spotlight

Shirley Pulis Xerxen March 13, 2024

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Tax changes and potential of gaming in Kenya under the spotlight

A panel at today’s SiGMA Africa Summit explored Kenya’s recent online gaming tax adjustments, their implications and what makes gaming in Kenya attractive for investors. Moderating the panel was SiGMA conference presenter Lilly Douse, with panellists Frank Deya, Director at Betcoin.Social, Phillip Onyango, Managing Partner at P.I. Onyango & Co. Advocates, and Purity Wahiu, Operations Manager at Palms Bet.

Kenya’s revised tax framework

The conversation began with a breakdown of the Kenyan tax structure as it affects the gaming sector. The panel covered the array of taxes imposed on the industry, including a 20% withholding tax on winnings, a 12.5% excise duty on bets, and the regular corporate tax. Additionally, operators are subject to a 15% GGR tax, with a new mandate from the 2023 Finance Act stipulating a 24-hour period for tax remittance. The panellists discussed the recent proposals, which would require a 30% local ownership of betting companies. The implications of this and higher tax regime could see a shift in player behaviour, with a potential move towards unregistered or offshore platforms due to reduced winnings.

Regulatory clarity as a catalyst for growth

There was a shared sentiment among the panellists that the new regulations offer much-needed clarity which could lead to market stability and bolster investor confidence. Emphasising the importance of a predictable regulatory environment, they suggested that such transparency could elevate Kenya’s position as a mature market within the East African region.

Kenya’s leadership role in regional policy setting

The discussion touched on Kenya’s tendency to set trends in policy that other African nations follow. The panel mentioned the social benefits of tax revenue, such as contributions to the development of sports and culture and highlighted the public’s appreciation of their taxes being used for social good.

Balancing taxation and player retention

The conversation moved to the importance of finding a fair balance between taxation and allowing players to keep enough of their winnings. The need for proactive industry self-regulation and collaboration with regulatory authorities was emphasised, rather than reacting passively to government tax policies.

Maintaining competitiveness amidst tax changes

The panel agreed that in the face of new tax regimes, operators can stay competitive by offering incentives and ensuring adherence to tax regulations. Keeping abreast of tax requirements and maintaining an efficient operational team was pointed out as crucial for operators.

Highlighting untapped potential of gaming in Kenya

The panel concluded with a discussion on the potential of gaming in Kenya, citing the youthful population and ongoing infrastructure developments as key advantages. The sentiment was that Africa is poised for significant growth, driven by innovation and technological advancement, and is an attractive destination for investment.