Tribunal Blocks KRA Bid to Seize Sh1 Billion From SportPesa Operator

The Kenya Revenue Authority (KRA) has suffered a setback after the Tax Appeals Tribunal stopped its attempt to recover more than Sh1 billion from Milestone Games, the company that operates the SportPesa brand in Kenya, pending the determination of a tax dispute between the two parties.

The tribunal ordered the tax authority to unconditionally lift agency notices it had issued to five commercial banks and two telecommunications firms, saying KRA could not pursue recovery of disputed taxes while the matter was already before the tribunal on appeal.

The dispute stems from agency notices issued by KRA on April 30 to Absa Bank, KCB Bank, Ecobank, Safaricom and Airtel, directing them to freeze and remit funds held in Milestone Games’ bank accounts and mobile money platforms to settle what the taxman claims is unpaid excise duty.

“It follows that, once a taxpayer has lodged its appeal before the tribunal relating to a dispute on assessed taxes, the respondent is prohibited by law from issuing agency notices as mechanisms in recovery of the disputed taxes,” the tribunal ruled as per Business Daily.

The tribunal further directed that the recovery notices be withdrawn immediately, allowing the betting firm to continue accessing its accounts as the appeal proceeds.

“The agency notices issued by the respondent on 30th April to the appellant bankers and telco partners be and are hereby lifted unconditionally.”

Dispute Over Sh1 Billion Tax Demand

The latest legal battle revives tensions between the tax authority and the SportPesa brand, which has previously been embroiled in tax disputes that disrupted its operations. Seven years ago, Pevans East Africa, the former operator of SportPesa, suspended its business following increased betting taxes and a multi-billion-shilling tax dispute with KRA.

Milestone Games now finds itself facing a fresh demand amounting to Sh1,011,230,716 in excise duty on bets placed by customers between June 2023 and February 2024. The tax authority is also seeking Sh462,991 in withholding tax on betting winnings for the same period.

According to documents filed before the tribunal, Milestone Games challenged the assessment after receiving it on September 29, 2025, arguing that KRA failed to determine its objection within the 60-day period required under the Tax Procedures Act.

“The respondents did not make any decision on the notice of objection… within the 60 days… and therefore the objection stood allowed by operation of law,” Milestone Games says in its application.

The betting company further argues that although KRA eventually issued an objection decision on January 5, 2026, it had already exceeded the statutory deadline, rendering the decision invalid in law. Nonetheless, the company proceeded to formally lodge an appeal before the tribunal to challenge the assessment.

Milestone Games also accused the tax authority of deliberately issuing the agency notices late on a Friday afternoon in a move intended to cripple its operations before it could seek legal protection.

“The timing of the issuance of the agency notices on a Friday at 4.00pm was meant to deny the appellant a chance to move to court/the tribunal to protect its constitutional rights, thereby paralyzing its business operations,” it says, accusing the taxman of “malice, bad faith and ulterior motives”.

The company further claimed that some of the agency notices had been issued to financial institutions where it does not even maintain bank accounts, describing the move as unlawful and excessive.

Tribunal Faults Recovery Process

KRA opposed the application, arguing that the tribunal lacked jurisdiction to issue injunctive orders and further contended that Milestone Games had already secured similar relief before the High Court.

However, the tribunal dismissed those arguments after finding that the betting company had already filed a substantive appeal challenging KRA’s objection decision and that the case raised legitimate legal questions deserving a full hearing.

“The applicant filed an appeal at the tribunal on February 16, 2026, challenging the respondent’s decision of January 5, 2026. The tribunal has perused the applicant’s memorandum of appeal and is persuaded that the applicant has an arguable appeal which ought to be heard and determined on its merits,” the ruling says.

In reaching its decision, the tribunal relied on Section 42(14) of the Tax Procedures Act, which bars KRA from initiating recovery measures through agency notices where a taxpayer has already appealed a disputed assessment before the tribunal.

Although KRA informed the tribunal that it had withdrawn the agency notices, the judges found that the tax authority had merely suspended the recovery action instead of cancelling it altogether.

“The tribunal affirms that institution of recovery measures ought to be done in strict compliance with the law, hence the same cannot be left to the respondent to whimsically institute and lift agency notices as it so wishes. It must only do so within the bounds of the law,” the ruling says.

The tribunal subsequently ordered that all recovery measures remain suspended until the tax appeal is fully heard and determined.

The case is the latest chapter in the long-running tax battles involving the SportPesa brand. Following the closure of Pevans East Africa in 2019 after a dispute over betting taxes, the SportPesa trademark was transferred to UK-based Sportpesa Global Holding Limited, which later granted Milestone Games the rights to operate the brand in Kenya. The transition itself sparked shareholder disputes involving the original owners of Pevans East Africa.

The latest ruling offers temporary relief to Milestone Games by safeguarding access to its bank accounts and mobile money platforms, which are central to betting operations. Betting firms depend on mobile payment services such as M-Pesa and Airtel Money to receive wagers, process payouts and communicate with customers through dedicated paybills and short codes. The substantive tax dispute, however, remains unresolved and will now proceed to a full hearing before the Tax Appeals Tribunal, where the legality of KRA’s Sh1 billion assessment will ultimately be determined.