The Kenyan sports landscape is scheduled to face mixed reactions from the Finance Bill 2024, which was successfully passed for a second reading in parliament on 25th June 2024 before proceeding to the president for assent.
With accumulative costs for amateurs, there is increased taxation and incentives.
Protests and Government Legislation
Peaceful protests, which quickly erupted into chaos, have been witnessed across Kenya today, protesting against the government’s proposed legislation for the Finance Bill 2024.
The bill targets to raise an additional Ksh.346 billion in the 2024/25 financial year to mitigate state external borrowing and offset the current deficit in the national budget.
Although the Finance Bill 2024 aims to cushion the country economically, it comes with serious implications for the Ministry of Sports.
Negative Impacts of the Finance Bill on Kenyan Sports
Increased living costs for sportspeople
The proposed additional revenue and tax hikes will lead to increased prices on sporting equipment, training gear, sports registration, and membership fees.
The higher costs of sports-related services will make it harder for many families to afford the escalating costs of goods with the previous income, leading to a sharp decrease in leisure and other sporting activities.
Exclusion of tax incentives and exemptions
Members of amateur sporting associations in Kenya enjoy a special tax-exempt status on their earnings within the income tax bracket. This could cut funds available for these sports organizations, which control and support outdoor sporting activities.
The lifting of the tax exemption will shift the burden to the associations’ earnings as they will now be subject to income tax. The Finance Bill 2024 will therefore reduce funding and make it difficult for sports organizations to support their activities and foster talent development.
Increased tax burden for businesses
The proposed tax deductions might cripple small businesses.
As some of these businesses sponsor local sporting activities and events, the tax burden may result in financial strain, making them unable to allocate sponsorship funds for sports at the grassroots level.
This will negatively impact the growth of upcoming sports organizations due to a lack of funding for their operational costs.
How the proposed changes benefit sports
Provision of withholding tax on competitions won
Withholding tax on all sports winnings will now be allocated to the kitty set aside for the Sports, Arts, and Social Development Fund. This will be a great booster for supporting local talent through the development of sports, arts, and social activities across the country.
These funds will create dedicated financial stability upon which grassroots sport programs can be funded to host major events that contribute to sport and social development.
Tax deductions for businesses sponsoring sports
The Finance Bill 2024 proposes deductions for expenses accrued from sponsoring sports activities in the country, with approval from the Cabinet Secretary for Sports.
The move aims to attract more investors to sponsor sports, increasing funding, creating more opportunities for sportspeople, building better facilities, and making the sports sector financially attractive for sponsorships.
Increased funding for development of sports
Out of the proposed Ksh.346 billion to be raised the Finance Bill 2024/25, Ksh.16.5 billion will be allocated to the Sports Fund. This notable investment is part of the Ksh.23.7 billion jointly allocated to the Ministries of Sports and Tourism.
The Tourism Promotion and the Tourism Fund will receive Ksh.2.2 billion and Ksh.4.9 billion respectively. These funds will sustain sports tourism, promote athlete and sportsmanship development, and support sports infrastructure development. This will contribute to the rapid growth of sporting activities.
Allocation of excise duty to sports funds
The Finance Bill 2024 seeks a proposal to allocate 16% excise duty from all mobile money transfers to fund activities dedicated to arts, sports, and social development.
The government hopes to boost the available resources for sports development through this initiative by tapping into the significant volume of mobile money transactions. If adopted, the proposal will generate a substantial volume of funds for upgrading sports facilities and developing social initiatives in Kenya. This will likely increase international participation for athletes, better training programs, and avail modern facilities for use.
