High Court judge Justice Anthony Mrima has quashed the law asking betting companies to pay 7.5 excise duty on punter stakes.
Justice Mrima noted that the amendment was introduced by MPs without affording the public an opportunity to give their views.
“By the respondents’ own admission, the Finance Act did not propose the introduction of any taxes on gaming and lottery, but only the Finance Act. As such, no efforts whatsoever were taken to ensure compliance with Article 47 of the Constitution and the Fair Administrative Actions Act,” said the judge.
The betting industry has become one of the targets for ‘sin’ taxes, which the government levies on goods and services considered harmful, costly to society or morally suspect.
Sports betting is popular among the youth, with some funding their gaming addiction with a stream of loans from banks and digital lenders.
The case was filed by the Association of Gaming Operators of Kenya (AGOK) through their officials Judith Kiragu, Daniel Mogeni and Nickson Mwangi.
They claimed the process leading up to the introduction of excise duty on betting, gaming, price competitions and lotteries and the provision raising the tax to 30 percent and apportioning it at 7.5 percent on betting, gaming, price competitions and lotteries, fell short of various constitutional edicts and other statutory provisions.
They argued that gaming and lottery is not a product to be subjected to excise duty and termed the 7.5 percent tax costly.
Kenya Revenue Authority (KRA) defended the Act saying there was adequate public participation before the drafting of the Finance Bill 2021.
The taxman argued that excise duty on stakes, is a consumption tax and it is borne by the punters collected by the bookmarker.
Parliament also dismissed the allegations and said the amendments had the backing of the public.
The judge, however, said the imposition of Excise Duty on betting at 20 percent of the amount wagered or staked was discussed at public engagement fora, but legislators went ahead and provided further taxes on gaming and lotteries, which was not part of the Finance Bill and consequently not discussed during the public engagement.
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