Court Order Bars Kenya Revenue Authority from Collecting $27 Million a Month in Taxes from Sports Betting Winners

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A court order has barred the Kenya Revenue Authority’s (KRA’s) efforts to collect taxes amounting to more than Ksh2.7 billion (about $27 million) per month from betting wins.

The Authority – an agency responsible for the assessment, collection and accounting for all revenues that are due to Kenya’s government – raised concerns over the matter earlier this week.

The government body argues the orders, issued by Senior Resident Magistrate D.M. Kivuti sitting at Kenya’s Milimani Commercial Courts, have stopped the operations of crucial Income Tax Act sections, effectively rendering KRA unable to collect taxes earmarked for national development projects.

As per a budget statement read last year by Kenya’s National Treasury Cabinet Secretary, Henry Rotich, taxes drawn from betting activities are earmarked to finance sports, art, cultural developments and the rollout of the Universal Health programmes.

The order follows the 2014 filing of a suit by a Mr. Benson Irungu against betting firm, Sportpesa Ltd trading as Pevans East Africa. The suit sought to stop Sportpesa from deducting and remitting taxes arising from Mr Benson Irungu and any other person’s winnings.

Aggrieved by an earlier order stopping Sportpesa from deducting withholding tax on winnings from betting, KRA – which had not been party to the case – sought to be enjoined as an interested party while seeking to set aside the earlier orders. The orders were subsequently overturned on March 29th 2019 allowing KRA to continue collecting due taxes from Sportpesa among other betting companies.

However, in a surprising turn of events for KRA, Mr Irungu moved to court a fortnight ago seeking orders for the stay of execution against the orders granted last 29th March by Senior Resident Magistrate Isaac Orenge.

The new orders by Senior Resident Magistrate D. M. Kivuti were heard and issued in KRA’s absence and were only brought to the Authority’s attention last week Thursday the 18th April in the afternoon.

KRA’s counsel led by Acting Commissioner Legal Services, Mr Paul Matuku and assisted by David Ontweka and George Ochieng, have however managed to file their responses and submissions seeking that the orders granted by Senior Resident Magistrate D. M. Kivuti  be vacated.

At a hearing this week, Advocates appearing for Mr Irungu requested the Court for more time to file their replying affidavits following KRA’s submissions.

Senior Resident Magistrate D. M. Kivuti however declined to vacate the orders issued on 11th April 2019, directing all parties to file their responses and appear for hearing on Monday next week on April 29, 2019 .

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