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Kenya Introduces 5% Withholding Tax on All Betting Withdrawals Under Finance Act 2025

Kenya has implemented a new 5% withholding tax on all withdrawals from betting and gaming wallets, replacing the previous 20% tax on net winnings. The measure took effect on 1 July 2025 under the Finance Act 2025, reshaping how gambling income is taxed in the country.

Under the new law, any withdrawal from a betting or gaming account is now subject to a flat 5% deduction, regardless of whether the amount withdrawn represents profit or simply a return of deposited funds. The reform effectively removes the previous definition of “winnings,” which had limited taxation to net profits, and instead applies the levy at the point of withdrawal.

The government said the change aims to simplify tax collection and improve compliance in the fast-growing online betting industry. Officials expect the adjustment to boost national revenue, projecting tax inflows from the gaming sector to rise from KSh 5.4 billion to more than KSh 11 billion annually. In addition, the excise duty on betting and gaming has been reduced from 15% to 5%, now applied to the amount deposited into a betting wallet rather than on each individual stake.

The reform has triggered backlash among Kenyan bettors, many of whom argue that taxing all withdrawals — even when no winnings are made — is unfair and discourages participation on licensed platforms. Social media users have described the new rule as “a tax on losing,” while several player associations warned that the measure could drive activity toward unregulated betting sites.

Tax experts note that the system aligns Kenya’s gambling taxation with international trends toward simpler, automated withholding mechanisms, but warn that the abrupt change could create short-term disruption for operators as they adjust their systems. Licensed bookmakers and gaming firms are now required to deduct and remit the 5% tax directly to the Kenya Revenue Authority upon every withdrawal request.

The Finance Act 2025 represents one of Kenya’s most comprehensive fiscal overhauls in recent years, with gambling reforms seen as a key component of the government’s broader digital revenue modernization strategy.

Published October 18, 2025 by Brian Oiriga
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