SPORTPESA

SportPesa has been awarded a license to operate in the current financial year ending June 2023, ending years of regulatory and court battles pitting the firm against the Betting Control and Licensing Board (BCLB).

A list of betting firms authorised to operate in the 2022/23 fiscal year shows that Milestone Games Limited –which operates under the SportPesa brand— has been awarded licence number 0000448.

The regulator published the updated list of authorised betting firms on its website. Milestone has in the past two years relied on a temporary court order to operate amid battles over ownership of the SportPesa trademark.

Pevans East Africa pioneered sports betting in the country in November 2013 with the SportPesa brand and operated until July 2019 when its licence was cancelled for what BCLB said was non-payment of taxes amounting to Sh95 billion.

Milestone subsequently entered the betting business on October 30, 2020, using the SportPesa trade name and it was issued a directive by BCLB on the same day to stop using the brand.

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The regulator at the time said the trademark belonged to Pevans. It later emerged that two shareholders of Pevans — Paul Wanderi Ndung’u and Asenath Wacera Maina— were left out of the ownership of Milestone.

The duo has sued the Registrar of Trademarks and Milestone, arguing that the brand was irregularly transferred from Pevans.

It was not immediately clear what prompted the change of stance at BCLB that saw the regulator issue Milestone with a permit.

Mr Ndung’u had, however, issued a public statement recently, predicting that the regulator would soon clear Milestone due to pressure from powerful individuals close to the outgoing administration.

“The same Cabinet Secretary (Fred Matiang’i) has ensured that all the relevant government institutions and multi agencies have cleared Milestone Games Limited to get a licence within the June/July within all necessary means that the power of state confers to the institutions,” Mr Ndungu wrote in a letter dated July 30, 2022.

The letter was addressed to President Uhuru Kenyatta to whom he appealed to reverse the takeover of the SportPesa brand and assets. Milestone is among 46 firms cleared by BCLB to operate in the current fiscal year.

A majority of the companies were cleared by the taxman between the start of last month and August 5, paving the way for the issuance of their licenses by the BCLB. “Between 1st July and 5th August 2022, a total of one hundred and five (105) companies have been cleared by KRA for issuance of BCLB license,” KRA said in a response to Business Daily.

SportPesa is the most popular gaming brand in Kenya, enjoying a customer base of an estimated 12 million gamblers. Punters placed bets valued at Sh447.33 billion through SportPesa in the 68 months that it operated in Kenya under Pevans, highlighting the betting firm’s dominance in the country.

SOURCE: Business daily

Kenya Revenue Authority (KRA) has been given the nod to enforce the collection of winnings or betting tax using agency notices, as they are income and subject to taxation.

In a win for the taxman, High Court judge Alfred Mabeya said winnings or betting tax is an income and is subject to taxation and the tax rates prescribed in the Income Tax Act.

The judge made the decision in a matter filed by Pevans East Africa, the previous owners of betting firm SportPesa. The KRA was demanding Sh1.6 billion from the betting firm but SportPesa argued that the taxman had no powers to use agency notices to collect winnings, an argument that was upheld by the Tax Appeals Tribunal.

The court heard that the betting firm made a voluntary self-disclosure of betting tax for 2018 of Sh1.2 billion and made a settlement proposal. The Finance Act of 2018 required taxpayers to withhold 20 percent on gross winnings paid by punters and remit it to KRA.

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KRA said it later assessed withholding tax on winnings for October 2018 to February 2019 and demanded Sh21.2 billion inclusive of penalties and interest.

And when the firm refused to pay, KRA wrote to Betting Control of Licensing Board (BCLB) saying the betting firm was not tax compliant. The firm paid Sh1.9 billion pending the determination of the case.

The tribunal later held that the winnings did not include the stake of the punters and set aside the demand of Sh5.8 billion.

KRA later demanded payment of Sh1.66 billion plus penalties and interest but the tribunal quashed the demand saying the taxman can only do so through filing a case.

In the appeal, KRA said the betting firm had conceded to unpaid tax but failed to settle the amount and the tribunal erred in holding that KRA lacked the powers to enforce the collection of taxes under Betting Act.

The betting firm also said KRA should offset the amount demanded from the Sh1.9 billion it had paid earlier.

Justice Mabeya said KRA is empowered to administer and enforce provisions of laws including betting Act, even though the Betting Act does not provide for an enforcement mechanism. He said betting tax qualifies as a withholding tax and the issuance of agency notices to force collection of betting tax withholding tax is well within the powers of KRA.

The judge said it was clear that the Sh1.9 billion paid in 2019 was not withholding tax but to avoid non-renewal of its license. “The court finds that the sum of Kshs1.9 billion was not paid as withholding tax but as security for any taxes that would have been found to be due,” the judge said.

He, however, directed that the amount to be deducted from the amount deposited to KRA and the balance be subjected to refund as provided by tax laws.

SOURCE: Business daily

Kenya’s SportPesa has been awarded a license as BCLB withdraw from it position

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KRA wins Sh1.6 billion tax fight with SportPesa

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