Betting has become a booming business in many parts of Africa. This has been driven by easier access to the internet and the easy-to-use gaming websites, greater access to payment methods, and the popularity of the major foreign football leagues.
However, the rush of punters wanting to gamble and of investors to provide them with the means to do so has also been matched by the desire of governments to tax the industry. Governments across Africa are certainly trying to ensure that they are “winners.” Many governments tax the industry at multiple levels – taxing the operators on sales, customers on bets placed and again on winnings, and then also taxing operators on the purchase of the services that they need.
The table below summarises how the industry is taxed in a selection of African countries, and illustrates the multiplicity of taxes and the high rates.
• Ghana, Tanzania and Zambia all have a special income tax regime for the industry, which charges a tax on Gross Gaming Revenue (GGR) or turnover rather than profit. The tax rate in Tanzania and Zambia depends on the type of gaming. Ghana then also levies a further income tax on profit as well, called the Growth & Sustainability Levy.
• Ghana and Uganda both charge a tax on money transfers.
• VAT in Ethiopia is applied to stakes in practice, but a Directive from the tax administration suggests it should be on GGR.
• The withholding tax on winnings in South Africa only applies to bets involving horse races.
Governments seem to regard the industry as a soft target for increased taxes, and possibly also bring an element of morality to their thinking about taxes. It is not clear that they really understand the industry – for example, how can an industry be sustainable if it expects to retain about 10-12% of stakes but has to pay a tax of 15% on stakes?
Given that many African governments are looking for additional revenue, we think it likely that more countries will change the way they tax the gaming industry. And tax authorities will also try to collect more taxes under existing systems.
Altogether, a new and growing industry, which has rapidly growing turnover and number of industry participants, and which may also be seen as a soft target for moral grounds suggests that the tax landscape for the industry will be changeable and generally hostile.
We are well placed to advise you, if you are discussing the shape of the tax system with any governments, or trying to understand how the tax system actually works, or if you are facing challenges with the way tax authorities interpret the tax law or how they apply it.
Meet the Author
This article was written by our man in Africa, Russell Eastaugh. Russel has extensive African experience, in particular in Nigeria and Uganda, and extensive experience of the betting industry. Contact Russell at email@example.com