Kenya’s High Court has upheld the legality of the 12.5% excise duty on betting stakes, marking a significant win for the government’s efforts to curb gambling addiction and expand tax compliance in the sector.
In a judgment delivered by Justice Stephen Mbungi in Kakamega, the court dismissed a petition challenging the enactment and implementation of the levy under the Excise Duty Act, 2015, as amended by the Finance Act, 2023. The ruling found that the contested provisions did not breach the Constitution and did not amount to double taxation.
“It is a cardinal principle of statutory interpretation that all provisions of a statute should be read holistically, not in isolation,” Justice Mbungi stated. “Paragraph 4A of Part II of the First Schedule to the Excise Duty Act, as amended, is not in contravention of Article 2(4) of the Constitution.”
Petition Challenged Betting Tax Structure
The petition, filed on August 21, 2023, by Edward Okwama, listed the National Assembly, Milestone Gaming Limited, Standard Global East Africa, the Kenya Revenue Authority, and the Attorney General as respondents.
At the heart of the dispute was the legality of the 12.5% excise duty imposed on the amount staked by persons participating in betting, alongside an existing 20% withholding tax on winnings. The petitioner argued that applying both levies on punters constituted double taxation and discriminated against them, contrary to Article 27 of the Constitution.
The National Assembly defended the law, citing Article 95 of the Constitution and affirming that the Finance Act, 2023, was enacted following due legislative process.
Court Differentiates Between Taxes
In rejecting the petition, Justice Mbungi clarified the distinction between the taxes:
- Excise duty is charged on punters when they stake bets.
- Withholding tax is charged only on winnings.
“The difference is clearly discernible,” the Judge noted. “Gross Gaming Revenue under Section 29(a) of the Betting, Lotteries and Gaming Act is a separate tax levied on betting companies, while excise duty applies to punters. Therefore, it cannot amount to double taxation.”
Policy Context
The ruling is seen as a boost to Kenya’s regulatory framework for the betting industry, which has faced mounting scrutiny over its social impact. The excise duty was introduced as part of broader fiscal measures aimed at discouraging excessive gambling while generating public revenue.
Industry analysts say the decision could solidify the government’s position in ongoing debates over gambling taxation and may set a precedent for future disputes in the fast-growing sector.
