SportPesa threatens to leave Kenya due to sharp tax increase

ne gaming provider SportPesa has warned that it could shut down its Kenyan operations if the new taxation regime is imposed on 1 January, 2018.

Last month, Kenyan President Uhuru Kenyatta signed into law a new tax rate of 35% on gross profits from all gambling activities, including sports betting, gaming and lottery.

Currently, Kenya-listed operators are required to pay a 7.5% tax on their net revenue.

SportPesa was among the first to vocalise its discontent with the government move. Indeed, the company has already terminated most of its sports sponsorship deals in Kenya due to the tax hike.

It has now said that it could stop all of its gambling activities in the country if the government does not reconsider the new rate.

Speaking in a media briefing, SportPesa Global Chief Executive, Gerasim Nikolov, said the company is currently looking at options to relocate its base to Tanzania or the UK, which could in turn lead to job losses in Kenya.

“There is nowhere in the world where such a huge tax is levied on turnovers and even here in Kenya, no firm can survive today if a 35% tax was put on its turnover,” Nikolov said.

"Unfortunately, the ultimate effect of us shifting operations from here will be wide considering the various businesses that depend on this industry,” he added.

Ronald Karauri, Chief Executive of SportPesa Kenya, also called for the country’s government to drop the new tax proposals.

According to Daily Nation, Kauri said: “You cannot run a business just to pay tax to the government; it is not worth the sweat and were we not present in the UK and Tanzania, we would just wind up.

“I don’t think the government will benefit either because this is a death sentence to the whole industry.”