Sportpesa and Betin have won a court case that sought to stop KRA from taxing gross betting payouts. According to The Star, the Tax Appeals Tribunal of betting firms ruled that 20% withholding tax should emanate from net winnings, not total winnings.
The disagreements on taxing payouts came after Treasury earlier sought to tax stake of betting companies, as opposed to payout after winning.
Besides, betting companies and KRA earlier failed to agree on the definition of the term “winnings”. Betting companies calculated winnings as the positive difference between the payout and stake placed in a month.
On the other hand, the tax authority posits that term represents the gross amount of payout, including the stake.
The earlier ruling by the high court saw a harsh operating environment for betting companies. This led to the exit of major players like Sportpesa and Betin.