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As governments across Africa seek to recover from the financial impact of COVID-19 restrictions, gambling finds itself in the crosshairs of several budget and financial proposals.
Other countries such as Ghana and Uganda are also modernising their systems to collect tax to address leaks and increase government revenue.
Kenya
Perhaps the most notable proposed changes are in Kenya, where the Finance Bill 2022 was introduced just days after the budget proposal for the 2022-23 financial year was released at the start of April 2022 and includes an increase to the controversial excise duty on gambling.
The Finance Bill proposes increasing the excise duty from 7.5 percent to 20 percent for betting or gambling wagers, as well as for prize competitions and lotteries, with the exception of charitable lotteries.
Changes to the gambling excise duty are proposed to be effective from July 1, 2022.
KPMG, which in the past warned that the excise duty along with other tax burdens would be the nail in the industry’s coffin, said in its assessment of the Finance Bill that the latest proposal of a “substantial increase” in the excise duty rates has been forced on the government as it looks to “bridge the revenue gap”.
Ukur Yatani, the Cabinet secretary of the National Treasury and Planning Ministry, responsible for the proposed budget for the 2022-23 financial year, has long supported the controversial excise duty.
Yatani also wants to introduce a new 15 percent fee for all gambling advertisements charged by all television stations, print media, billboards and radio stations for advertisements.
Malawi
By contrast, some nations in Africa are attempting to encourage increased economic activity by reducing or changing taxes.
Malawi’s 2022-23 state budget was delivered on February 18, 2022 and approved by parliament in March. Under a raft of new income tax measures, the Treasury announced it would reduce the withholding tax on gaming and gambling winnings from 20 percent to 5 percent.
In the budget statement, Sosten Gwengwe, the minister of finance and economic affairs, said the change was made following his ministry receiving requests from both the Malawi Gaming Board and operators for a review of the taxation regime of the sector, in particular how withholding tax is applied on the winnings.
“The minimum threshold of MK100,000 (€114) from which the withholding tax was applying will be replaced by a rebate of MK100,000 in the betting industry and MK500,000 in the gambling industry for each winning, after which, the 5 percent final withholding tax will apply,” according to the budget.
If a player wins less than MK500,000, the 5 percent withholding tax will not apply.
Malawi’s government has also introduced the requirement for a Tax Clearance Certificate (TCC) for some transactions to be completed, including for holders of a gambling licence.
There is no timeline provided in the budget for these proposals and, at the time of writing, the Malawi Gaming Board and National Lotteries Board had not responded to a request for comment.
Malawi introduced the withholding tax in last year's budget, as well as increased its excise tax rate on gross gaming revenue (GGR) from 10 to 15 percent.
Ghana
The Ghana Revenue Authority (GRA) has confirmed to VIXIO GamblingCompliance the introduction of a new digital way to collect taxes from the gambling industry to prevent leakage.
Since April 1, 2022, the GRA has required taxpayers with an annual turnover exceeding GH5m (€622,179) to make their filings online. Additionally, it has provided registration, filing and payment platforms for VAT for non-resident persons that provide digital services for use and enjoyment in Ghana.
Uganda
Uganda has similarly tried for a long time to update its own methods of tax collection to help stop leaks.
Speaking to Uganda’s parliament on April 20, 2022, Keefa Kiwanuka, chairperson of the Committee on Finance, said the gambling sector contributed SHS43.4bn (€11.4m) to the economy, “notwithstanding limited resources for monitoring gaming activities country-wide”.
The committee recommends that an additional SHS5.75bn is allocated to the National Lotteries and Gaming Regulatory Board for the creation of National Central Electronic Monitoring System to prevent operators dodging tax.
