High Court Upholds Use Of Agency Notices to Collect Betting Tax

KRA is set to continue enforcement of collection of winnings or betting tax by way of Agency Notices, as they are income and subject to taxation as per the tax rates prescribed in the Income Tax Act.

KRA had moved to the High Court after the Tax Appeal Tribunal through its Judgement dated 16th April 2021, held that the KRA had no powers to use Agency Notices to collect winnings or betting tax of Kshs. 1, 661, 350, 351 from Pevans East Africa Limited. The Tax Appeals Tribunal had further stated that the only resort the KRA had was to file a civil suit for recovery of unpaid betting taxes.

In agreeing with the KRA submissions and overturning the decision of the Tax Appeals Tribunal, Justice Alfred Mabeya observed:

“Betting, Lotteries, and Gaming Act (Betting Act) does not provide an enforcement mechanism and further winnings or betting tax is a subject of income Tax and its collection is by way of withholding tax, which is subject of the Tax Procedures Act, 2015. As such the KRA’s action of issuing Agency Notices to collect the betting tax is within the law”