Kenya’s gambling taxes the highest in Africa?

The Kenya government’s tough new across-the-board 35 percent tax rate of gambling GGR continued to create mainstream headlines in the country Monday, with the Daily Nation reporting on a study by professional business services provider PricewaterhouseCoopers (PwC) that reveals Kenya’s betting tax is the highest in the region and ahead of international gaming hubs.

PwC notes that other African countries like South Africa, Rwanda and Uganda all charge less at, respectively, 9.6 percent, 13 percent and 20 percent, whilst Tanzania recently changed corporate tax on gambling firms to just 6 percent of revenue in order to attract investment.

In the wider world, PwC found that Germany levies 5 percent, Las Vegas 6.75 percent, and Canada 20 percent.

The PwC figures have been welcomed as clearing up misconceptions of what gambling taxes in other jurisdictions really are – local media reports have published widely differing numbers, usually on the high side.

Steve Okello, a Tax Partner at PwC, told the Daily Nation that Kenya’s taxation is harsh on the nascent industry and could hurt the growth of related sectors and government revenues, with the affected firms scaling back operations or relocating their businesses.

“I feel the tax change that is probably the highest in Africa looks discriminatory, you know one industry is being picked out and heavily charged,” he said. “We are likely to see lots of cutting back on expenditure if not closures in the industry that will affect overall tax growth,” he added.

Okello suggested that a tax rate of 10 percent is more likely to encourage gambling firms to remain in Kenya and continue to invest in their businesses.

Other entities gave their view on the increased Kenya tax rate as well: Safaricom said it could be impacted because phone-based betting drove revenue in its SMS division, and the Kenya Revenue Authority said it was likely that the higher tax rate could in fact impair tax collection from betting firms.

There is now a real concern that some operators may cut their losses and depart Kenya for more business-friendly jurisdictions, including international online regulatory havens from whence they could continue to access African punters.

Analysts have also pointed out that if government hammered other blue chip listed Kenya businesses with a 35 percent tax on top of a 30 percent corporate tax, they would slide into losses.

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