•Judge Antony Mrima ruled that paragraphs 4b and 4d of the excise duty Act were illegal.
•The excise duty was introduced in the Finance act 2021 but the court has quashed it on grounds that there was no public participation.
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Casino operators and gamblers also got a reprieve after the same court nullified the law that introduced a 7.5 per cent excise duty on lottery tickets.
The excise duty was introduced in the Finance act 2021 but the court has quashed it on grounds that there was no public participation.
According to the now-quashed act, betting firms were to withhold and forward Sh75 out of every Sh1,000 wagered regardless of whether the punter wins or loses.
Judge Antony Mrima ruled that paragraphs 4b and 4d of the excise duty Act were illegal.
Paragraph 4b states that “Excise Duty on gaming shall be seven-point five per cent of the amount wagered or staked.”
Paragraph 4d states that “Excise Duty on the lottery (excluding chargeable lotteries) shall be seven-point five per cent of the amount paid or charged to buy the lottery ticket.”
The Judge said there was no public participation leading to the enactment of the said act.
“Going by the gravity of the submissions made by the participants during the public meetings on betting, there is no doubt that the public ought to have been accorded an opportunity to also express themselves on the issues of gaming and lottery. That opportunity was, however, not accorded,” the court said.
In their case, the Association of Gaming Operators had argued that the law was unconstitutional further arguing that gaming and lottery were not an excise as no good was being supplied nor was any service being provided.
They argued that the tax proposed to be imposed was too high and would drive investors out of the market.
It was their further argument that without considering the objection that there were no services nor goods supplied upon which excise could be levied, the National Assembly proposed to amend the Finance Bill by raising the tax to 30% and apportioning it across betting, gaming, price competition and lottery at 7.5 each.
However, in their defence, the state argued that section 9 of the Excise Duty Act provides that stake is a charge that allows a punter to participate in a bet, lottery or a game under the Betting, Gaming and Lotteries Act and as such, it is proper to levy excise duty on the stake for betting, gaming and lottery.
They further claimed that it was submitted that KRA does not seek to tax money that is held in the betting wallet but only the amount which is staked or wagered.