Why Kenya will not collect taxes from sports betting

The Kenya Revenue Authority (KRA) has hit a technical snag in its efforts to collect taxes amounting to more than Ksh2.7 billion (USD26.6 million) per month, accruing from betting wins.

This follows a court order issued by a magistrate’s court barring the taxman from accessing the monies.

The orders issued by Senior Resident Magistrate D.M. Kivuti sitting at the Milimani Commercial Courts (Nairobi) have stopped the operations of crucial Income Tax Act sections (Sections 2, 10, 34 and 35), effectively rendering KRA unable to collect the levies,  earmarked for national development projects.

This is per the budget  for the current financial year ending June 30, where  National Treasury Cabinet Secretary, Henry Rotich, had planned to have  taxes drawn from betting activities finance sports, art, cultural developments and the rollout of the Universal Health programmes.

The order issued by Senior Resident Magistrate Kivuti follows 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 29, 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 orders for the stay of execution against the orders granted last  March 29,  by Senior Resident Magistrate Isaac Orenge.

The new orders by Senior Resident Magistrate D. M. Kivuti were heard and issued in KRA’s absence and were only brought to the authority’s attention last week Thursday (April 18).

KRA’s counsel led by Acting Commissioner Legal Services, Mr Paul Matuku and assisted by David Ontweka and George Ochieng, have however managed to file their responses and submissions seeking that the orders granted by Senior Resident Magistrate D. M. Kivuti be vacated pending the hearing of the inter-partes case.

At this week’s hearing, advocates appearing for Mr Irungu requested the Court for more time to file their replying affidavits following KRA’s submissions.

The Senior Resident Magistrate D. M. Kivuti however declined to vacate the orders issued on April 11, 2019, directing all parties to file their responses and appear for hearing on Monday next week (April 29).

READ:Increasing Tax on Betting firms Bad for Kenya

Sub-Saharan Africa economic growth stuck below 3 percent

Sub-Saharan Africa’s economic growth slowed to 2.3 per cent in 2018 from 2.5 per cent in 2017, remaining below population growth for the fourth consecutive year, the World Bank has said.

In the April 2019 issue of Africa’s Pulse, its bi-annual analysis of the state of African economies published on Monday, the bank said regional growth was expected to recover to 2.8 per cent in 2019, staying below three per cent as it has been since 2015.

The slow growth reflects ongoing global uncertainty but increasingly comes from domestic macroeconomic instability including poorly managed debt, inflation, and deficits; political and regulatory uncertainty; and fragility that is having visible negative impacts on some African economies.

It also belies stronger performance in several smaller economies that continue to grow steadily, the bank said.

It noted that Nigeria’s growth rose to 1.9 per cent in 2018 from 0.8 per cent in 2017, reflecting a modest pick-up in the non-oil economy. South Africa came out of recession in the third quarter of 2018, but growth was subdued at 0.8 per cent over the year, as policy uncertainty held back investment.

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Angola, the region’s third-largest economy, remained in recession, with growth falling sharply as oil production stayed weak.

World Bank chief economist for Africa Albert Zeufack said the digital transformation could increase growth by nearly two percentage points per year and reduce poverty by nearly one percentage point per year in sub-Saharan Africa.

 This is a game-changer for Africa,” Zeufack said.

The World Bank said fragility in a handful of countries was costing sub-Saharan Africa over half a percentage point of growth per year.

“The drivers of fragility have evolved over time, and so too must the solutions,” said Cesar Calderon, lead economist and lead author of the report.

“Countries have a real opportunity to move from fragility to opportunity by cooperating across borders to tackle instability, violence, and climate change.”

Tanzania urged to set aside $65 million, budget by its prime minister

Tanzania’s Prime Minister, Kassim Majaliwa on 4th April 2019 asked the parliament to approve Tshs.148.8 billion ($65 million) for the Prime Minister`s Office (PMO) in the 2019/2020 financial year, and also emphasized that the country`s investment climate was improving.

Out the amount that the premier asked for, recurrent expenditure is expected to take up Tshs.86.2 billion ($37.4 million) while development expenditure is allocated Tshs.62.5 billion ($27.1 million).He also requested the National Assembly members to approve Tshs.124 billion ($53.9 million) for the Parliamentary Fund whereby Tshs.116.5 billion ($50.6 million) is for recurrent needs and Tshs.7.6 billion ($3.3 million) is development expenditure.

The premier also told the assembly that government efforts to create a conducive environment to attract investors are paying off, as by February 2019 the Tanzania Investment Centre (TIC) had attracted 145 new projects worth Tshs.4.2 trillion ($1.84 billion). He further stated that while local and foreign investors were controlling 72 per cent and 26 per cent of the projects respectively, a small remaining share falls under the joint venture category, and around 15,491 jobs were created out of the new investments. He also questioned Tanzania Revenue Authority`s (TRA) use of force and intimidation when it came to tax collection citing the foul cries by the taxpayers.

He emphasized that following the various measures that the government has been taking to convince investors to consider Tanzania as the best destination for investment, several reports indicate that Tanzania stands at the top of East African countries in attracting investors. On the basis of the United Nations Conference on Trade and Development (UNCTAD) 2018, Tanzania attracted investments valued at Tshs.2,7 trillion ($1.18 billion) followed by Uganda at Tshs.1.6 trillion ($700 million). The African Investment Index 2018 ranked Tanzania at number 13 in attracting investors out the 54 African states.

He also encouraged Tanzanians to grab the abundant available opportunities by investing in production of goods citing the government`s massive investment in infrastructure.

On the coming 2019 civil polls, which will be the sixth since the introduction of multiparty democracy in 1992, Mr. Majaliwa told the house that the government has already started preparing for them. He stated that the government has already completed the verification exercise on areas where the elections will be conducted in all the 185 district councils worldwide, and that the verification exercise aims at establishing accuracy on the areas and seeing how best to allocate budgets for the respective polling centers.

Also read: Tanzania unveils financial plan 2019/2020

South African business delegation arrives in Brazil

The South African business delegation has arrived in Brazil to participate at the 12th Latin American Defence and Security Exhibition (LAAD).

The exhibition which opened on Tuesday in Rio de Janeiro, Brazil, will end on Friday, 5 April.

LAAD is a leading Latin America Defence and Security event that gathers international and national companies that provide technologies, equipment and services for armed forces, special forces, police, homeland security and security managers from large companies, service concessionaires and critical infrastructure.

Companies exhibiting in the South African Pavilion have been assisted by the Department of Trade and Industry (the dti) through the Export Market Investment Assistance Scheme (EMIA), which aims to increase exports of South African manufactured products.

The dti said South Africa’s offerings comprise of textiles, body armour manufacturers, radar and communication systems, search and rescue boats and small to medium range arms.

The South African Consul-General in Brazil, Malose Mogale commended the efforts undertaken by the dti in bringing this diverse crop of companies in the South American region and emphasised the strategic importance of Brazil to South Africa.

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“Brazil remains a strategic partner for us in this region and the LAAD platforms offer us potential opportunities not only in this country but within The Mercado Comun del Sur or the Southern Common Market economic and commercial group, which Brazil is a member of,” said Mogale.

He said companies looking to explore Brazil should not neglect the important aspect of conducting due diligence on firms they are looking to explore partnerships or transactions with.

“As the mission, our primary aim is to urge South African companies to guard against compromising their intellectual property,” said Mogale.

“We have noticed that this is one aspect of conducting business that is generally neglected and we request that they approach the mission to confirm the authenticity of companies they are engaging with as we have a database of companies that we update regularly.

“Also, our companies must ensure that a certain aspect of their production remains local as that will be beneficial to creating jobs and growing the economy of the country,” he said.

Meanwhile, the South African chapter of the BRICS Business Council began hosting the group’s mid-term meeting in Johannesburg on Tuesday. The meeting which ends Wednesday will also mark the handing over of the rotating chair of the Council to Brazil.

The two-day meeting is being held under the theme “BRICS in Africa: Collaboration for Inclusive Growth and Shared Prosperity in the 4th Industrial Revolution”.

About 300 delegates, government leaders from the BRICS member countries, including the economic bloc’s captains of industry and domestic and international opinion makers are attending the meeting.

South Africa backs Namibia against dumping chicken from Brazil

The South African Poultry Association (SAPA) said on Tuesday that it had noted with alarm that the insidious dumping of chicken from Brazil that plagues the local industry has also taken root in Namibia.

Izaak Breitenbach, general manager of SAPA’s broiler division, said that it was increasingly clear that Southern Africa was now in the crosshairs of exporters looking for markets for the unwanted leg quarters that are the byproducts of their lucrative breast-meat exports to the US and Europe.

Breitenbach said that given similar experiences with the effects of chicken dumping in West Africa, it may be necessary for Africa to stand together to fight to dump from big market players.

After historically being a net importer of chicken, Namibia was encouraged by the increase in demand for poultry to invest in developing a home-grown chicken industry, following a pattern that saw local chicken industries in other African countries all but wiped out by dumped imports.

“Our neighbours to the north have a small chicken industry compared to ours and is even more vulnerable to the devastating effects of uncontrolled dumping, which poses serious risks even to a robust industry,” Breitenbach said.

“As the South African experience proves, job losses are soon to follow, but what is worse is that the investment in a new industry that Namibia embarked on only six years ago, might bear no more than stunted fruit once this predatory trade practice wipes out any possibility of industry expansion and development.

“We believe that the time has come for Southern African countries to stand together against this onslaught from Brazil, which is one of the biggest exporters of chicken in the world, and which targets this region with bulk exports of unwanted brown meat.”

Breitenbach said the Namibian industry is calling for drastic action, and they have the full support of the SA Poultry Association.

“Our members have already joined other producers in the Southern African Customs Union (SACU) in making an application to the International Trade Administration Commission for an 82 per cent import tariff imposed on Brazil, among a number of other countries,” Breitenbach said.

“Already, once thriving chicken industries in other African countries have bitten the dust. The experience in Namibia proves that Brazil is now targeting multiple markets with identical formats and prices, and this intentional predation needs to be addressed as a matter of urgency.”