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Sports sector faces mixed impacts from Kenya's 2024 finance bill, with increased funding and tax incentives, but higher costs for amateurs.
Protests have erupted across Kenya in response to the government's proposed 2024/25 finance bill a legislative plan aimed at raising KSh 346 billion in additional taxes to mitigate the national budget deficit and reduce state borrowing.
While the bill's primary focus is on addressing the country's economic challenges it carries significant implications for the sports sector.
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Pulse Sports delves into both the positive and negative impacts of the finance bill on Kenyan sports highlighting key proposals and their potential outcomes.
Positive impacts on the sports sector
1. Increased funding for sports development
One of the notable aspects of the finance bill is the allocation of Ksh 16.5 billion to the sports industry for the financial year 2024/25.
This substantial investment includes KSh 23.7 billion allocated to Sports and Tourism, KSh 4.9 billion to the Tourism Fund, and KSh 2.2 billion to the Tourism Promotion Fund.
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These funds are expected to enhance infrastructure, support athlete development, and promote sports tourism, contributing to the overall growth of the sports sector.
2. Tax deductions for sports sponsorship
The bill proposes allowing businesses to deduct expenses incurred from sponsoring sports, provided they have prior approval from the Cabinet Secretary responsible for sports.
This initiative aims to encourage private sector investment in sports by offering tax relief on sponsorships.
By making sports sponsorships more financially attractive, the government hopes to see increased private sector participation, which could lead to better funding, improved facilities, and more opportunities for athletes.
3. Allocation of withholding tax on winnings
Withholding taxes on winnings will now be directed to the Sports, Arts, and Social Development Fund.
This move ensures a continuous revenue stream dedicated to supporting the growth of sports and arts sectors.
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By earmarking these funds specifically for sports and social development, the government provides a stable financial base that can be used to enhance sports programs, support grassroots initiatives, and fund major sporting events.
4. Excise duty contribution to sports & social development
The finance bill includes a proposal to allocate 16% of excise duty from mobile money transfers to the Sports, Arts, and Social Development Fund.
This innovative funding approach taps into the high volume of mobile transactions, generating substantial funds for various initiatives, including sports.
This could significantly boost the resources available for sports development, allowing for better facilities, training programs, and international participation.
Negative impacts on the sports sector
1. Repeal of tax exemptions for amateur sporting associations
A concerning aspect of the finance bill is the proposal to do away with the existing income tax exemption for amateur sporting associations.
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These organizations, which foster and control outdoor sports and whose members are amateurs, have traditionally enjoyed tax-exempt status.
The removal of this exemption will burden amateur sporting associations, as they will now be subject to income tax on their earnings.
This could reduce the funds available for these associations, making it more difficult for them to support their activities and develop talent.
2. Increased cost of living for sportspersons
The proposed tax hikes aimed at raising additional revenue could lead to an increased cost of living for Kenyans.
As the cost of goods and services rises, disposable income available for leisure activities, including sports, might decrease.
Families may find it harder to afford sports equipment, training, and participation fees for their children, potentially leading to reduced participation in sports.
3. Potential burden on small businesses that support sports
While the tax deductions for sports sponsorships are a positive step, the overall increase in taxes may place a financial strain on small businesses.
These businesses, which are potential sponsors for local sports teams and events, might find it challenging to allocate funds for sponsorships if their overall tax burden increases.
This could reduce the availability of sponsorships for smaller sports organizations, affecting their operations and growth.
Follow us on X (Twitter) for more updates.
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