The national football governing body Football Kenya Federation (FKF) has petitioned the government to consider reviewing a recent proposal to levy a 50% tax on betting companies.
The proposal, contained in the Finance Bill 2017 and announced in the Budget Statement recently read by the National Treasury Cabinet Secretary, Henry Rotich seeks to increase the current tax rate payable under the Betting, Lotteries, and Gambling Act to 50%.
However, in a swift stakeholder petition, FKF has described the taxation proposal as stringent and likely to stifle sporting development.
Speaking when he confirmed the soccer governing body’s concern, FKF President Nick Mwendwa said the proposal may wipe out crucial investments recently undertaken by betting companies.
In place of an excessive tax regime, Mwendwa has expressed FKF’s commitment to mediate a win-win position that will see betting companies continue to play a sustainable role in sporting development.
The federation, he said is moving with speed to engage the government, with the aim of reviewing the proposal, in a bid to ensure that implementation of the same accommodates huge investments in sports sponsorships for national teams, local clubs, and other positive multiplier effects.
The new proposal means that the industry will be taxed half of its gross earnings before expenses including marketing costs and thereafter subjected to a further 30% on net profit after deducting all other expenses.
The new tax, if implemented means that sports betting firms will not be able to engage with clubs or federations due to budgetary reasons and mostly because they will not be able to directly negotiate for key marketing rights.
Currently, FKF is in charge of managing the national teams and of over 6000 clubs in the country. The federation has been seeking private sector sponsorships in order to grow the sport at a national and grassroots level.
“We support the government’s proposal to introduce a uniform tax across the board on betting, lottery, gaming, and competition industry,” said Mwendwa.
“However, we feel it is important to acknowledge the growth of sports marketing as an industry and also acknowledge that worldwide the private sector plays a big role in developing sports outside what is considered as national assets such as the national, youth and women’s teams”. He said
He added: The implementation of the proposed National Sports, Culture and Arts fund should not curtail the unprecedented growth and beneficial sports sponsorship drive undertaken by the betting, gaming and lottery enterprises,” he explained.
Whereas the National Sports, Culture, and Arts fund is a noble idea it captures aspects that don’t reflect sporting activities. In this perspective, we will engage the government for a further discussion on the best way to manage sports sponsorships” said the FA president.
We propose that Government reviews one of its Vision 2030 goals to initiate a sports lottery as a tool to raise funds for development of sports.
“It is because of the above-mentioned and the floated idea to have a newly created National Sports, Culture and Arts fund to support the development of the same that FKF is engaging the government. This is in an effort aimed at ensuring implementation of the tax proposal does not largely affect companies that proactively support football.
Further, it is the federation’s view that betting companies have played and continue to play a key developmental role for Kenyan football despite dwindling fortunes brought about by stiff competition in the market and implementing the tax proposal as it is, risks seeing many betting companies pull out of the multimillion sports sponsorship deals with both clubs and the national federation.
Kenyan football development has continued to suffer stifled growth arising from lack of development resources, which include sufficient financial allocations; however, the leading role and confidence exhibited by betting companies has heralded a new dawn for the game among other sporting disciplines.