KRA, SportPesa locked in Sh1billion tax battle as tribunal halts recovery
The Kenya Revenue Authority (KRA) and Milestone Games Limited, the company operating the SportPesa brand in Kenya, are embroiled in a fresh legal battle over the taxman’s attempt to recover Sh1 billion in alleged unpaid taxes.
The dispute escalated after KRA issued agency notices on April 30, directing five commercial banks—Absa Bank Kenya, KCB Bank Kenya, Ecobank Kenya, and two other lenders—as well as telecommunications firms Safaricom and Airtel Kenya, to freeze and remit funds belonging to Milestone Games.
The notices targeted money held in the company’s bank accounts and mobile money payment channels, including M-Pesa and Airtel Money, in a move that threatened to disrupt the betting firm’s operations.
However, the Tax Appeals Tribunal has temporarily halted KRA’s recovery efforts, ruling that the tax authority cannot enforce collection measures while the company has an active appeal challenging the tax assessment.
In its decision, the tribunal directed KRA to withdraw the agency notices pending the hearing and determination of the appeal, offering temporary relief to the betting operator.
Milestone Games argues that the disputed tax assessment became invalid after KRA failed to respond to its formal objection within the 60-day period prescribed under the Tax Procedures Act.
According to the company, the law provides that where the Commissioner fails to issue an objection decision within the stipulated period, “the objection shall be deemed to be allowed,” effectively invalidating the tax assessment.
Although it maintains that the assessment lapsed automatically, Milestone Games said it filed an appeal before the tribunal “out of an abundance of caution” to safeguard its legal position.
The betting firm also accused KRA of acting in bad faith by issuing the agency notices late on a Friday afternoon, arguing that the timing was deliberately calculated to cripple its business before it could obtain court intervention.
It further claimed that some of the notices had been served on financial institutions where it does not even maintain accounts, describing the recovery action as unlawful and oppressive.
KRA defended its actions before the tribunal, arguing that the tribunal lacked jurisdiction to issue injunctions against the tax authority. It also maintained that the agency notices had already been suspended, rendering the company’s application unnecessary.
The tribunal, however, disagreed, holding that merely suspending the notices was insufficient where an appeal had already been lodged.
The tribunal emphasized that tax recovery measures must strictly comply with the law and that enforcement action should not proceed while a taxpayer is exercising its statutory right of appeal.
The dispute revives memories of the high-profile tax battles that forced the original SportPesa operator, Pevans East Africa, to suspend operations in 2019 following multi-billion-shilling tax demands and increased betting levies.
Although the SportPesa brand later returned to the Kenyan market under Milestone Games through a licensing arrangement, it now finds itself once again at the centre of a major tax dispute with the revenue authority.
