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African nations seeking to increase their tax revenue from online gambling through enhanced oversight are reaping the rewards, as the Kenya Revenue Authority (KRA) reveals the success of its new real-time monitoring system.
Additionally, officials from Uganda have held meetings with counterparts from Malawi to discuss the success of their own system and the possibility of something similar being rolled out in other African jurisdictions.
Kenya
In October 2022, Kenya’s government ordered gambling companies to remit their taxes on a real time or near real time basis via an Electronic Tax Invoice Management System (eTIMS).
A spokesperson for the KRA said that since the implementation of the directive in November 2022, “16 operators have been onboarded with tax collections to date amounting to over KSH$5bn (€36.1m)".
“Of this amount, KSH2.3bn is from excise duty (7.5 percent on stakes) while KSH2.7bn is from withholding tax (20 percent on winnings),” the KRA told VIXIO GamblingCompliance.
Comparatively, in June 2022, National Treasury figures revealed it managed to raise just KSH3.4bn for the year. The National Treasury had expected to raise KSH5.4bn.
Recently, the KRA told VIXIO “it is expected that by the end of March 2023, all betting and online gaming operators will be transmitting both daily payments and transactions data, real time”.
News of the success of the new system comes soon after a bombshell High Court judgment on January 31, 2023 forced the removal of a controversial 7.5 percent excise duty tax on gambling activities.
However, the KRA stressed again that the ruling “did not remove excise duty on the entire betting industry.”
“The excise duty was removed only for gaming and lotteries. The excise duty on betting and prize competition was maintained. The KRA has moved to the Court of Appeal to challenge the finding of the High Court,” the KRA said.
Nigeria
In October 2022, Nigeria similarly implemented a new digital tax collection system for offshore operators and introduced a new permit that does not require establishing a local company or creating an onshore presence.
David Kicks, the co-founder and CEO of E-Technologies Global Limited, the company overseeing managing the new Sentinel National Payment Gateway (SNPG), recently provided VIXIO with an update saying “we are in the process of onboarding a number of leading operators”.
The creation of the SNPG was accompanied by the announcement of a Remote Operator Permit (ROP) that does not require establishing a local company or creating an onshore presence.
Kicks said he hopes to be able to “make some formal announcements shortly” regarding operators receiving the ROP, as well as “some additional countries contracting with us”.
Operators that get the ROP will be connected to the SNPG. For now, existing licensees will not.
Once connected, ROP holders will have access to Nigerian payment service providers and pay a 4.5 percent gaming duty on all player deposits, which will be deducted automatically.
No further taxes will be payable in Nigeria, including no corporation tax as remote gambling operators will be non-domiciled.
Uganda and Malawi
Uganda’s National Lotteries and Gaming Regulatory Board (NLGRB) hosted the Malawi Gaming and Lotteries Authority and the Malawi Ministry of Finance on February 1, where discussions focused on the scope and progress of tax compliance in Uganda's gambling industry.
The NLGRB said the delegates from Malawi were keen to learn about “the regulatory framework and taxes applicable to the industry in Uganda and discussed the potential to replicate accordingly”.
At the meeting, the regulators shared details on the various taxes applicable to the gambling industry, such as licensing fees, withholding and corporate taxes.
Uganda’s Revenue Authority was also present at the talks; however, it had not responded to a request for comment at the time of writing.
The NLGRB said on social media the challenge of keeping track of the growing online market, illegal activity and preventing money laundering has been countered by the establishment of a National Electronic Central Monitoring System (NCMS).
The NCMS includes features such as age verification, limit checks and self-exclusion, which allow individuals to voluntarily exclude themselves from gambling activities, according to the NLGRB.
Uganda’s gambling regulator and parliament have long touted the NCMS as a key tool to monitor the sector and increase tax collection.
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”.
In a meeting on February 1, 2023, Uganda’s National Planning Authority agreed to work closely with the NLGRB to ensure “the gambling industry contributes positively to the development of the country, while at the same time, taking into account the negative impacts of gambling on society”.
