SportPesa welcome tax rebate on sponsorship
SportPesa Chief Executive Officer Ronald Karauri explains a point during an interview with Nation Sport on October 11, 2017 at his office in Nairobi. PHOTO | CHRIS OMOLLO |
What you need to know:
- We have made big strides in supporting sports in Kenya, says Karauri.
- Betting firm tells government it is ready to continue funding sports in Kenya with a reduced tax burden.
SportPesa have written a proposal to the government seeking to end a two-month stalemate that forced the giant betting firm to terminate their sports sponsorship agreements in Kenya.
In a letter to Treasury CS Henry Rotich, SportPesa CEO Ronald Karauri is now asking for the betting firm to be given a tax reprieve equivalent to the funding it injects into the development of sports.
“We are aware, from various reports, that the funding of sports will be added to the list of items that are tax deductible, a solution we gladly welcome. We are, however, not clear on how this exercise is to be implemented,” Karaura said in his letter.
Karauri said the higher tax rate on gambling revenue of 35 per cent introduced by the government last year had resulted in a “heavy tax burden” that had forced SportPesa to even terminate some contracts with suppliers in an effort to stay afloat as a business, and prevent direct job losses.
“We are eager to continue to support the sports industry in Kenya having made huge strides in the recent past,” Karauri explained. “To that end, we wish to suggest that we be allowed to deduct as an expense all sponsorship amounts payable for the month that they are due at the time of calculating and remitting the monthly taxes.”
SportPesa withdrew all sponsorship agreements with local sports entities at the beginning of this year valued at about half a billion shillings annually.
Karauri said the decision was made because the firm could not afford to pay the increased tax rates slapped on betting firms that took effect at the start of the year, meet other expenses including payment of salaries to hundreds of staff, and still remain with funds to support sports activities.
Adversely affected by this decision were the country’s giant football clubs Gor Mahia and AFC Leopards, plus national sports federation, namely, Football Kenya Federation, Kenyan Premier League, Kenya Boxing Federation and Kenya Rugby Union.
The decision left many sports organizations with huge financial obligation that they are finding hard to meet.
SportPesa lost a court case that sort to temporarily suspend implementation of the tax increase.
