This Alert brings to your attention the High Court’s ruling in the case of Commissioner of Domestic Taxes Department (KRA) vs Pevans East Africa Limited and Shop and Deliver Limited and 5 others (Betting Companies) Case No HCCOMMITA/E003/2019.

The Betting Companies are limited liability companies engaged in the business of sport betting under licence from the Betting, Lotteries and Gaming Act (Chapter 131 of Laws of Kenya).

The KRA demanded payment of withholding (WHT)on winnings paid to bettors for the period 2018 and 2019. The Betting Companies objected to the demand, disputing the KRA’s assessment and attempts to collect WHT from the companies.

The Tribunal rendered its decision on the consolidated appeals on 06 November 2019, setting aside KRA’s demands for payment of WHT. KRA appealed against the Tribunal decision at the High Court. The High Court upheld the Tribunal’s decision in the judgement dated 13 May 2022.


On diverse dates, KRA demanded WHT from the Betting Companies on winnings paid to bettors for the period 2018 and 2019. The Betting Companies objected to the demands and disputed the formula applied by KRA in determining the WHT payable on the basis that the KRA had incorrectly interpreted the term ‘winnings.’

KRA disagreed and issued agency notices to the bankers and mobile service money providers of the companies to collect the tax. Aggrieved, the Betting Companies filed an appeal before the Tribunal.

The Tribunal determined that the Betting Companies had locus standi (capacity) to file the appeal. This was against the KRA’s  contention that it was the bettors and not the Betting companies had locus to file the appeal. Further, the Tribunal concluded that winnings under the Income Tax Act Cap.470 (ITA) did not include the amounts staked by the bettor.

On whether the KRA has a legal basis to demand the WHT from the Betting Companies during the period in question, the Tribunal held that KRA had no legal basis for the WHT tax demand. The Tribunal laid emphasis on section 35(6) of the ITA which was deleted in 2016 and reintroduced in 2019 to assert that KRA could not ask the ‘withholder’ to account for money they failed to withhold during the period 2018-2019.

Further, the Tribunal determined that although KRA had power to collect taxes without issuing an amended assessment in certain instances, in this case it concluded that the demand and notices were against the Respondents’ procedural and constitutional rights and therefore the companies had the right to appeal to the Tribunal. Dissatisfied with decision of the Tribunal, the KRA filed this appeal.

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