KRA connects the second series of bookmakers to its system

The Times Tower in Nairobi, headquarters of the Kenya Revenue Authority in this photo taken on September 15, 2020. PHOTO | DENNIS ONSONGO | NMG

The IRS has added a second group of top 10 betting companies to its system, bringing the total number of companies it has real-time access to 16 as it steps up its fight against tax fraud in the sector.

The IRS told the Business Daily in an email interview that real-time payments and data transfers for the balance will begin by Friday this week.

Those connected to its system must calculate and pay their due taxes every day, a departure from the past when most taxes were paid the following month after they were due.

“This phase is focused on delivering real-time data transmission on top of day-to-day payment transmission,” said Rispah Simiyu, Kenya Revenue Authority Commissioner, Domestic Taxes.

The IRS says this will give it real-time visibility into betting transactions once it starts receiving all betting information, including the amount of money bettors have staked and won, as it moves to collect more revenue.

Read: The bookies will pay the tax every day while KRA tightens the hoop

KRA says the real-time visibility of betting transactions and the unavailability of betting and gaming transaction data is a key challenge it has faced in fighting tax fraud in the betting industry.

“With integration, daily visibility provides daily trends against which compliance action can be taken,” Ms Simiyu said.

She added that the integration is carried out in groups of taxpayers in two phases – daily tax remittances and real-time data transfer.

The first group of the six largest payers started making daily excise and withholding tax remittances in mid-November 2022 after a successful pilot.

This comes days after it emerged that six betting companies were remitting excise and withholding taxes on stakes and winnings to KRA by 1am every day.

This is part of the integration of KRA’s system with that of the betting sector, with the first phase, which began in mid-November, collecting a daily excise duty of 7.5 percent on stakes and a withholding tax of 20 percent on winnings from this company.

The integration of the two systems is just one of the revenue administration reforms aimed at closing all tax leakages in the lucrative sports betting sector and improving revenue collection from the gambling craze.

“Data integration is expected to generate additional revenues after verifying the transferred data. Real-time data transmission is expected by the end of January 2023 from the taxpayers involved,” Ms Simiyu said.

She added that KRA will check the data as soon as it receives it to see if it matches the taxes paid by bookmakers.

State Secretary to the Ministry of Finance Chris Kiptoo in his presentation on January 11, during the launch of the three-day public sector hearings, noted that the Ministry of Finance, together with the KRA, is improving tax administration measures to ensure that revenue collection remains on target.

One of the ways in which these improvements are realized is the integration of the KRA system with the Betting Sector.

These far-reaching changes are aimed at helping taxpayers connect to their platforms to enable real-time tax calculations as the government tries to tame rogue entities in the sector.

“The rollout is being phased in, starting with companies that paid the highest revenue in total betting tax collected in the 2021/22 fiscal year,” Ms Simiyu said.

SportPesa, one of the biggest sports betting companies, piloted the exercise in mid-November last year before rolling it out to the other five companies. Six large taxpayers belong to the first phase.

Read: EDITORIAL: The new tax system to tame rogue entities is welcome

The second series will target the next 10 largest payers before finally expanding to outstanding taxpayers who contribute about 10 percent of KRA’s collections in the betting and gaming sector.

The third and final phase is expected to be completed in the third quarter of the financial year.

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