Kenya is looking to reform its gambling taxation system through the proposed Finance Bill 2026, which includes a 20% withholding tax on all betting winnings, for both residents and non-residents.
The Bill was presented in Parliament on April 30, and public input will be accepted until May 25. If successful, this legislation will represent a major transition from the current tax laws for gambling, which were changed last year to place a 5% tax only on the funds deposited into an account and the funds withdrawn from an account by a player.
In accordance with the proposed amendments to the 3rd Schedule of the Income Tax Act, the 20% tax on gambling winnings will again be imposed directly onto the winnings from gambling.
According to legal experts with Cliffe Dekker Hofmeyr, the proposed withholding tax will represent “a return to the previous tax structure” prior to the 2025 reforms. They also noted that the withholding tax on the winnings from gambling will be 20%, and the withdrawal will continue to be subject to a 5% tax.
Winning bets are defined by the draft legislation as the payouts received from licensed gaming, lottery, and prize competition operators, excluding the original stake amount that was wagered. A withdrawal is defined as any amount of money or cash equivalent that is removed from the gambling account of a player through a request made by that player.
The reactions were mixed to the proposed taxation measures. Proponents of the proposed changes argue that stricter taxation and better oversight can lead to greater transparency and increase the overall public revenues from the gambling sector.
