The Sportpesa boss has called on the government to agree on sustainable regulation through a tax review failure to which he says will see mushrooming of illegal betting dens and collapse of Sports fund.
Speaking on Saturday Sportpesa Chief executive officer Ronald Karauri said the taxation which is on earnings and not profit will spell termination not only for his the firm for the nascent gaming and betting companies in the country.
Karauri said that the firm waa looking at various options which he could not divulge as the increased taxation takes effect from January 1 2018.
” We are looking at various options to see what can be done. We still have six months to go but it is not looking very good for the industry.” Karauri said. “Should he same taxation apply to other sectors of the economy companies will fold and many will be rendered jobless.”
President Uhuru Kenyatta signed the Finance Bill 2017 and eight others into law. The president had on June 13 rejected the Bill recommending that betting, lotteries and gaming activities be taxed at the rate of 35 per cent of gross earnings.
Earlier in June Betway country manager Wanja Gikonyo said that the new law would likely discourage new investments while existing firms would opt out and relocate to neighbouring countries where the tax regime was significantly lower.
“From a regional point of view, if as a country we end up being the highest taxed it would affect potential investors coming in,” Gikonyo said. “If they look at the environment vis-a-vis countries next to us, they might go there because (they have) a more favourable tax environment.”
Betting firms have continuously warned that the new tax rates will cripple businesses with some opting to withdraw sponsorships of local teams in order to minimize the cost of doing business in the country.
Sportpesa last month announced that it will withdraw sponsorship for local sports clubs and unions beginning January due to new tax on revenue.
The teams which will be affected include Kenya Rugby Union taking the biggest share of Sh600 million for the next five years with Kenya Premier League giants Gor Mahia and AFC Leopards receiving Sh50 and Sh45 million respectively. The Kenya Premier League sponsorship package is worth Sh360 million with Boxing Association of Kenya receiving Sh20 million .
Karauri said the firm had sent out submissions to the Parliamentary departmental committee on labour and social welfare calling for retention of the existing tax regime and that Kenya Revenue Authority hasd agreed with them that the taxation needs to be brought further down.
The firm currently employs over 300 staff and just recently ventured into the Tanzanian market by sponsoring two of its biggest football clubs Simba and Yanga.