Two Kenyan betting giants, SportPesa Ltd and Betin Kenya, are challenging the claim of the Kenyan Revenue Authority (KRA) that collectively owe to the country Sh14 billion.
The companies have filed separate petitions at the High Court, urging it to suspend the notices which KRA had issued against them until their cases are brought to an end. Both operators have denied owing the alleged taxes to the Authority, claiming that KRA’s decision and notices could affect their operations, leading to massive losses that could not be reversed.
In the documents filed to the Court, SportPesa claims that KRA is engaged in a pattern of raising agency notices while trying to illegally obtain taxes from gambling operators at all costs. Kenyan Revenue Authority has claimed that SportPesa owes it a total of SH3,296,532,000 for April 2019. Allegedly, Betin Kenya owes it Sh11,906,505,579 for the period from October 2018 to February 2019.
According to media reports, the Authority issued notices to Safaricom and their banks to demand huge sums of money allegedly owed by the operators. SportPesa, however, claims that no assessment has been carried out by KRA before issuing the demand. The application filed by the operator to the High Court states that Safaricom holds funds which belong to individual players who placed their bets with SportPesa. This basically means that the funds do not belong to and are not held by the mobile network operator on behalf of the gambling company.
KRA Claims Constitute Abuse of Power, SportPesa Says
As mentioned above, SportPesa claims that no assessment was carried out by KRA as required by Section 50 of the Tax Procedures Act. Kamau Karori, the gambling company’s lawyer has explained that the agency had prematurely issued the notices, before providing the operator with the chance to challenge the alleged taxes before the country’s Tax Appeal Tribunal as allowed under the Tax Procedures Act.
In addition, SportPesa claims that the effect of the double taxation on both the punters’ stakes and the generated winnings would have an extremely negative effect on its performance since the stake constitutes income which has already been taxed as required by the authorities. The gambling operator also says that it has never been given the opportunity to object to the KRA demands in correspondence to the mechanisms given by the Tax Procedure Act.
Apart from that, the company’s lawyer states that the gambling operator now faces the risk of ceasing to operate as a result of illegal agency notices. The petition filed by the operator in the High Court claims that the KRA’s notice is an example for misuse of power and constitutes abuse of office, and the company should not be held liable for the costs of any proceedings carried out by the Authority as part of its disregard of the law.
The other company, which allegedly owes unpaid taxes to KRA, Betin Kenya, claims that it would be unable to undertake some basic operations, including salaries payment or meeting other financial obligations to suppliers and other services providers. Safaricom has frozen the pay bill accounts of the operator as a result of the actions initiated by the KRA, so Betin Kenya is not able to trade and all operations have been ceased as a result of the illegal Agency notice.