The Kenya Revenue Authority (KRA) has hit a technical snag in its efforts to collect taxes amounting to more than Ksh2.7 billion per month accruing from betting wins following a court order issued by a magistrate’s court. Senior Resident Magistrate D.M. Kivuti sitting at the Milimani Commercial Courts stopped the operations of crucial Income Tax Act sections (2, 10, 34 and 35), effectively barring KRA from collecting the taxes.
As per the budget statement read last year by National Treasury Cabinet Secretary Henry Rotich, taxes drawn from betting activities had been earmarked to finance sports, art, cultural developments and the rollout of the Universal Health programmes.
Kivuti order followed the 2014 filing of a suit by a Mr Benson Irungu against SportPesa Ltd trading as Pevans East Africa. The suit sought to stop SportPesa from deducting and remitting taxes arising from Mr Benson Irungu and any other person’s winnings.
Aggrieved by an earlier order stopping SportPesa from deducting withholding tax on winnings from betting, KRA which had not been party to the case sought to be enjoined as an interested party while seeking to set aside the earlier orders. The orders were subsequently overturned on March 29th 2019 allowing KRA to continue collecting due taxes from SportPesa among other betting companies.
However, in a surprising and frustrating turn of events for KRA, Mr Benson Irungu moved to court a fortnight ago seeking the stay of execution against the orders granted last 29th March by Senior Resident Magistrate Isaac Orenge.
The new orders by D. M. Kivuti were heard and issued in KRA’s absence and were only brought to the Authority’s attention last week on Thursday the 18th April in the afternoon.
KRA’s counsel led by Acting Commissioner Legal Services, Mr Paul Matuku and assisted by David Ontweka and George Ochieng, have managed to file their responses and submissions seeking to vacate the orders pending the hearing of the inter-partes case.
At the hearing today, Advocates appearing for Mr Irungu requested the court for more time to file their replying affidavits following KRA’s submissions. Mr Kivuti, however, rejected the plea and instead directed all parties to file their responses and appear for hearing on Monday 29th April.
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