A fresh legal dispute has emerged between the Kenya Revenue Authority (KRA) and Milestone Games Limited, the company operating the SportPesa brand in Kenya, over the tax authority’s attempt to recover Sh1 billion in alleged unpaid taxes.
The conflict began after KRA issued agency notices on April 30, directing five commercial banks including Absa, KCB and Ecobank as well as Safaricom and Airtel, to freeze and remit funds held by Milestone Games. The notices targeted money held in the company’s bank accounts and mobile money payment channels, including M-Pesa and Airtel Money.
However, the Tax Appeals Tribunal has temporarily stopped the recovery process, ruling that KRA cannot enforce collection measures while the betting firm has an active appeal challenging the tax assessment. The tribunal ordered the tax authority to withdraw the agency notices until the case is fully determined.
The tax dispute dates back to an assessment issued by KRA demanding Sh1.01 billion in excise duty on betting stakes, calculated at 12.5 percent of customer wagers between June 2023 and February 2024. The authority also claimed an additional Sh462,991 in withholding tax on betting winnings.
Milestone Games argues that the tax assessment should have been automatically cancelled because KRA failed to respond to its formal objection within the 60-day period required under the Tax Procedures Act. Although the company maintains that the assessment became invalid by law, it nevertheless filed an appeal before the tribunal as a safeguard.
The betting company further accused KRA of acting in bad faith by issuing the agency notices late on a Friday afternoon, claiming the timing was intended to cripple its operations before it could seek legal protection. It also alleged that some of the notices were sent to financial institutions where it does not even maintain accounts.
KRA defended its actions, arguing that the tribunal lacked the authority to issue injunctions and noting that the notices had already been suspended. However, the tribunal found that merely suspending the notices was insufficient, emphasizing that tax recovery actions must strictly comply with the law, particularly where an appeal has already been lodged.
The latest dispute revives memories of the tax battles that forced the original SportPesa operator, Pevans East Africa, to suspend operations in 2019 following a series of tax demands and higher betting levies. While the SportPesa brand later returned to Kenya under Milestone Games through a licensing arrangement, it now finds itself facing another high-stakes legal battle with the tax authority.
The tribunal’s ruling provides temporary relief for the betting firm, but the final outcome will depend on whether the tax assessment is upheld once the appeal is heard. The case is expected to have wider implications for tax enforcement procedures and the betting industry’s relationship with regulators in Kenya.
