The Nanyuki High Court ruled in favor of KRA interpretation of the term winnings. The court settled for KRA’s definition of winning as “gross gaming revenues”, which are subject to 20% withholding tax according to the Finance Act of 2018.
This ruling followers two petitions by betting firms to declare taxation of winnings unconstitutional.
The petitions put forth in October 2018 challenged the constitutional interpretation of “winnings” suggesting that winnings from lotteries, betting or gaming activities are not income, therefore, should not be subjected to tax under the Income Tax Act.
The petitioners being betting companies such as Sportpesa, Betway, and Cheza, argued that one cannot levy a tax on betting as it is a habit, not a trade or profession. At the same time, the petitioners sought a refund on unconstitutional taxes levied on winnings by an order of mandamus.
The Nanyuki High Court affirmed that the duty of determining how taxes are imposed and enforced lies within the National Assembly. The collection method enacted by KRA, therefore, did not violate the rights of betting companies.