Betting firm SportPesa has denied reports that it is planning to leave Kenya because of a new law signed by President Uhuru Kenyatta two weeks ago that imposes higher taxes on their revenues.
The firm said that a statement from the firm’s Global Chief Executive Officer Gerasim Nikolov at a media briefing on Friday was taken out of context.
“Our CEO was simply trying to demonstrate that no business can survive such heavy taxation on revenue and not profit,” the firm said in a brief statement on its Twitter page on Sunday.
“SportPesa was the first and remains the best gaming brand in Kenya and SportPesa will be the last gaming brand to ever close in Kenya for whatever reason,” it added.
Mr Nikolov’s statement on Friday suggested the firm was on its way out of Kenya because of frustration at the increase in tax on their revenue to 35 per cent. He said the company can no longer operate profitably under the current taxation regime.
“There is nowhere in the world where such a huge tax is levied on turnovers and even here in Kenya, no firm can survive today if a 35 per cent tax was put on its turnover. Unfortunately, the ultimate effect of us shifting operations from here will be wide, considering the various business that depend on this industry,” said Mr Nikolov at a media briefing Friday.
Gambling companies are digging in for a fight with the government after President Kenyatta overturned a decision by MPs not to raise the gambling tax and forced them to approve a 35 per cent rate.
Two weeks ago, President Kenyatta signed the Finance Bill into law, imposing a uniform 35 per cent tax on all gambling revenue – betting, gaming, lotteries and prize competitions. Licensed sports betting operators had previously been subject to a 7.5 per cent betting tax.
SportPesa Kenya CEO Ronald Karauri, however, said the tax cannot discourage betting as it has no direct impact on participants’ earnings as is the case with other sin taxes like the excise levy.
“You cannot run a business just to pay tax to the government. It is not worth the sweat and were we not present in the UK and Tanzania, we would just wind up. I don’t think the government will benefit either, because this is a death sentence to the whole industry,” said Mr Karauri, who also chairs the Association of Gaming Operators-Kenya (AGOK).
Last month, the SportPesa founder announced the withdrawal of sponsorship for local sports clubs starting in January next year, citing the new tax burden. The firm, founded in Kenya in 2014, currently sponsors Gor Mahia and AFC Leopards, Kenya’s biggest football teams. It also sponsors the Kenyan Premier League (KPL) and the Kenya Football Federation.
Author: Staff Writer