Pambazuka Lottery suspends Kenya operations over 35 per cent tax

Pambazuka National Lottery has suspended its operations in Kenya saying the new tax takes it total cost of operations to 115 per cent.

“Operating any lottery under this framework is not possible and therefore business operations are forced to close,”the company said in a statement on Sunday.

The company noted that the effect of the 35 per cent tax on all tickets sales has made them to cease operations  until a “sustainable regulatory framework” is in place.

“All prize claims after yesterday’s draw will be paid out to winners directly or from the company offices on April 7th 2018,” it added.

This came after Kenyan sports gambling firm Sportpesa withdrew all their local sponsorship commitments over the proposed tax of 35%.

Last year, President Uhuru Kenyatta finally signed Finance Bill 2017 and eight others into law.

The law raises the tax rate on gambling but sets it at a lower rate than had originally been proposed. It will impose a tax of 35 per cent of gross profits on all gambling.

Until now, lotteries were taxed at five percent, betting firms – bookmakers – at 7.5 per cent, casino gambling at 12 per cent and competitions like raffles at 15 percent.

The Finance Act seeks to amend the law relating to various taxes and duties. It also seeks to amend laws including:

The Betting, Lotteries and Gambling Act (Cap. 131) to increase the tax rates from the currents rates to 35 per cent

The Kenya Revenue Authority Act (Cap.469) to include newly introduced laws: Tax Procedures Act 2015, Value Added Tax Act 2013, Miscellaneous Fees and Levies Act 2016 and Excise Duty Act 2015 as part of laws administered by the Kenya Revenue Authority.

The Stamp Duty Act (Cap.480) to provide for tax neutrality for Islamic financial products to favourable compete with similar conventional products in Kenyan markets.

The Sacco Societies Act (Cap.490B) to define ‘deposits’ and ‘deposit taking sacco business’ to add principles of Islamic law to the Act as a form of recognition of Islamic saccos.