Ronald Karuri: Our CEO was simply trying to demonstrate that no business can survive such heavy taxation on revenue and not profit,

SportPesa has been hard pressed to allay reports that it is planning to leave Kenya over the new law signed by President Uhuru Kenyatta that imposes a 35 per cent tax on its revenues.

The betting firm now says that a statement from the firm’s Global CEO Gerasim Nikolov at a media briefing on Friday was taken out of context.

“Our CEO was simply trying to demonstrate that no business can survive such heavy taxation on revenue and not profit,” SportPesa said in a brief statement on its Twitter page on Sunday.

“SportPesa was the first and remains the best gaming brand in Kenya and SportPesa will be the last gaming brand to ever close in Kenya for whatever reason,” it added.

Mr Nikolov’s statement on Friday suggested the firm was on its way out of Kenya because of frustration brought on by the tax increase.

He had said the company can no longer operate profitably under the new taxation regime.

“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 per cent tax was put on its turnover.

“Unfortunately, the ultimate effect of us shifting operations from here will be wide, considering the various business that depend on this industry,” said Mr Nikolov at a media briefing Friday.

The episode is only the latest in gambling companies’ fight with the government after President Kenyatta overturned a decision by MPs not to raise the gambling tax, forcing them to approve the higher tax rate.

Two weeks ago, Mr Kenyatta signed the Finance Bill into law, imposing a uniform 35 per cent tax on all gambling revenue, that is, cash from betting, gaming, lotteries and prize competitions.

Licensed sports betting operators had previously been subject to a 7.5 per cent betting tax.

SportPesa Kenya CEO Ronald Karauri, however, said the tax cannot discourage betting as it has no direct impact on participants’ earnings as is the case with other sin taxes like the excise levy.

“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,” said Mr Karauri, who also chairs the Association of Gaming Operators-Kenya (AGOK).

Last month, the SportPesa founder announced the withdrawal of sponsorship for local sports clubs starting in January next year, citing the new tax burden.

The firm, founded in Kenya in 2014, currently sponsors Gor Mahia and AFC Leopards, Kenya’s biggest football teams.

It also sponsors the Kenyan Premier League (KPL) and the Kenya Football Federation.

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