Kenya proposes 20% tax on gambling winnings under Finance Bill 2026

Kenya’s Finance Bill 2026 would reintroduce a 20% withholding tax on gambling winnings, potentially reversing part of the 2025 tax shift that moved the sector toward a 5% tax model on betting-wallet withdrawals.

Kenya is preparing another major change to its gambling tax regime after the Finance Bill 2026 proposed a 20% withholding tax on winnings earned by both residents and non-residents. The bill was released on April 30 and proposes amendments to several tax laws, including the Income Tax Act, the Excise Duty Act and the Tax Procedures Act. If approved, most of the amendments are expected to take effect from July 1, 2026.

The proposal would partly reverse the tax approach introduced under the Finance Act 2025. That framework replaced the previous 20% levy on net winnings with a 5% tax on every withdrawal from a betting wallet, while also introducing a 5% excise duty on deposits into betting wallets. Legal analysis by Cliffe Dekker Hofmeyr says the 2026 bill would broaden the tax base by combining the existing 5% withholding tax on withdrawals with a new 20% withholding tax on winnings from betting or gaming wallets.

The bill also proposes to reintroduce a legal definition of “winnings” in the Income Tax Act. Under the proposed wording, winnings would mean a payout by a person licensed under the Gambling Control Act from a lottery or prize competition, excluding the amount staked or wagered. This distinction is important because it suggests the 20% tax is intended to apply to net winnings rather than the player’s original stake.

Another important change concerns the definition of “amount deposited” for betting and gambling excise duty. The Finance Bill 2026 would define deposits broadly to include money or value paid, transferred, credited or otherwise made available for betting or gambling, whether in cash, cash equivalents, chips, tokens, credits or similar instruments. This would make it harder for operators to avoid tax through different wallet, token or platform structures.

The reform is still under public review. Kenya’s National Assembly invited the public and stakeholders to submit memoranda on the Finance Bill 2026 to the Departmental Committee on Finance and National Planning. Written submissions are due by May 25 at 5pm, and the consultation is being conducted under constitutional public-participation requirements.

For operators, the proposal could require new tax-calculation systems, clearer segregation between stakes and winnings, and updated reporting tools for both local and potentially offshore-facing activity. For players, the main concern is whether the new structure will create a heavier effective tax burden when combined with existing withdrawal and deposit taxes.

The Finance Bill 2026 shows that Kenya is still searching for the right balance between revenue collection, consumer protection and market sustainability. A 20% tax on winnings could strengthen public revenue, but it may also raise pressure on licensed operators if players shift toward informal or offshore platforms. The final impact will depend on whether Parliament keeps the proposal unchanged after public participation.