Taxation in sports

Let’s talk about Tax in Sports;


Tax is the amount of money that a government requires people, including sportspeople, to pay according to their earnings or income. The amount collected is used for national development in building roads, construction hospitals, schools and more projects.

Article 209 of the Constitution of Kenya, 2010 states that the National Government has the right to collect taxes. The National Government has delegated this right to the body known as the Kenya Revenue Authority (KRA) which collects all revenue in Kenya under the supervision of the Ministry of Finance.

How much tax should a sportsperson pay?

Taxable Income in Sports

Income tax is charged on income/earnings of a person accrued in or derived from Kenya.

Once paid, the taxed person is expected to fill returns with KRA on yearly basis. If there were no earnings in the year, the sportsperson is expected to fill nil returns.

Sportspersons earn income from the below three (3) main sources;

  1. Sports services performed

This is earnings from the actual engagement in the sport by the athlete, footballer, a golfer or a rugby player i.e athletics, football, golfing and rugby respectively. Sportsperson should pay and fill returns for income earned after a sports event.

2. Incentive bonuses

These are the payments made to sportspeople to attract them to join an organisation, and they regularly extend to performance bonuses. To mean that, the better a sportsperson performs, the higher the chances of getting a bonus in addition to their actual pay. The sportsperson is expected to pay a percentage of the bonus as a tax as well.

3. Endorsement contracts.

These are non- employment contracts, therefore the income from endorsement contracts will be taxed as gains or profits from services rendered by the sportsperson. Such services are like appearing at corporate events, taping and photographing of the sportsperson for advertisement purposes and more.[1]

How does KRA collect Income Tax?

KRA collects tax as Pay As You Earn (PAYE) or as withholding Tax as outlined below;

  1. Pay As You Earn (PAYE)

This is a method of collecting tax from individuals who are employed, whether or not they are a Kenyan resident. Whereby a sportsperson is under an employment contract, their employer, for example a sports club, will deduct tax in the form of PAYE from the sportspersons salary to pay to KRA. However, it is important to note that PAYE tax can only be deducted from an individual in this case a sportspersons salary which is Ksh. 24,000 and above per month.

      2. Withholding Tax

Withholding Income Tax is tax withheld at source. Examples of payments that is made to sportspeople that is subject to withholding tax include; Management, professional or training fees, Consultancy fees, Contractual fees, Appearance at or performance to entertain and more.

An example is where sportspersons use their earnings to pay sports managers and agents who are non-residents, KRA states that they should deduct withholding tax at the rate of 20 percent of the gross amount payable and pay the balance to the manager or agent. While, local organizers of sporting events are also required by KRA to deduct 20 percent withholding tax on any payment made to non-resident sportspersons and sports managers and agents. The person who makes the payments Moreso the employer is the one who deducts withholding tax, and pays it to the KRA.

Next time we look into ‘Doping in Sports’.

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By Joan Kamau

MSA Legal Consultant


[1] John Nakholi, ‘The Taxation of Athlete’s Income In Kenya: An Analysis Of The Duty To Pay Tax And Its Link With Optimal Tax Revenue Collection’ [2017] Strathmore Law <> accessed 14 June 2022.

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