KRA Tax Integration Boosts Betting Sector Revenue by 30%

The Kenya Revenue Authority (KRA) has reported a 30% growth in revenue from the betting sector after successfully integrating numerous betting companies into its tax system. The Authority’s implementation of new tax procedures within the betting sector resulted in the collection of over KES 15.100 billion from Excise on Betting and Withholding Tax on Winnings.

KRA’s tax collection performance reflected a significant growth of 23.9% from the tax heads, compared to the same period in the financial year 2021/2022. The Withholding Tax on winnings also netted KES 8.601 billion, marking an increase of 21.1% from the previous fiscal year.

One of the most remarkable performance metrics was the Excise Duty on Betting, which registered an outstanding growth of 116.2%. KRA collected KES 6.640 billion against a target of KES 5.715 billion, reflecting a surplus collection of KES 925 million. This increase represents a 30% growth compared to the same period in the previous financial year.

“The strong performance is largely attributed to the successful integration of betting companies into the KRA tax system,” said a representative from KRA. “So far, we have integrated 36 companies, which contributed significantly to the sector’s revenue growth.”

KRA says it has already begun the process of integrating an additional 87 betting firms into the system, a move expected to further boost revenue collection from the sector. The integration began in mid-October 2022, targeting daily collection of the 7.5% Excise Duty on stakes and the 20% Withholding Tax on winnings from the companies.

According to KRA, this initiative aligns with their commitment to streamline tax remittances from the sector, intending to scale up revenue mobilisation and collection. The programme has enabled KRA to make significant improvements on tax administrative processes in the betting and gaming sector, with the daily visibility of the firms providing trends that inform compliance measures.

KRA integration programme also facilitates the verification of daily remittances by taxpayers by making betting and gaming transaction data readily available. This integration is part of the tax-at-source initiatives being implemented by KRA, a global trend moving away from traditional self-assessment of taxes. This new method allows the collection of tax information and revenue directly at the source of income on a real-time basis.

“As part of this transformative programme, we are working towards seamless taxation by ensuring that our systems, taxpayers, and businesses are integrated to allow data to move automatically through machine-to-machine based processes, including real-time where appropriate,” the KRA representative added.

In addition to the betting and gaming sector, the KRA’s tax-at-source programme includes the Electronic Tax Invoice Management System (eTIMS). The eTIMS initiative has minimised VAT fraud and enhanced tax revenue, with 95,732 VAT-registered taxpayers being onboarded, leading to remittances of Kshs 272.365 billion. The KRA expects revenue performance to improve considerably as more taxpayers adopt the eTIMS. The system is also anticipated to simplify return filing through prepopulated VAT returns.