10% BETTING TAX, AND MATTERS ARISING-By: Pius Selasi Gbli

The withholding tax on winnings from lotteries, games of chance, and sports betting has been a hot topic in Ghana since its introduction. The government of Ghana passed a 10% withholding tax on winnings from lotteries, games of chance and sports betting a few months ago. The Income Tax Act, 2015 (Act 896) is the primary legislation governing taxation in Ghana. Income Tax (Amendment) (No.2), Act 2023 (Act 1094) imposes a 10% withholding tax on all payments made to residents for winnings from lotteries, games of chance, or sports betting. The purpose of this tax is to curb potential revenue leakages and ensure that gaming and betting activities contribute their fair share to government revenues.

The bill, however, took effect on the 15th of August, 2023 and since then, there have been various views and arguments on the bill by experts in taxation, politicians, opinion leaders and young people who seem to be against the bill.

First and foremost, some groups of individuals opined that the bill lacks scope in its applicability. There is ambiguity regarding which activities are considered as ‘games of chance,’ as well as the legal definition of ‘winnings.’ This lack of clarity has led to challenges in determining which events fall within the scope of the tax. Consequently, for individuals who depend on gambling as a primary source of income, this tax further reduces their take-home pay. Moreover, they argue that government while passing the bill did not consider losses, as individuals may lose several times before winning.

Also, many lottery operators and punters do not keep records of their transactions, making it difficult for revenue authorities to track taxable winnings effectively. Additionally, online gaming platforms present particular challenges in enforcing compliance due to their intangible nature while other punters also argue that implementing a withholding tax on their winnings amounts to double taxation because they already pay a certain percentage of their income when participating in these games.

Again, some stakeholders are of the view that even though the tax aims to improve government revenue by tapping into a previously under-regulated source, it however, remains to be seen whether this measure will achieve its intended purpose amid compliance challenges. Gaming operators and organizers argue that the introduction of this tax has increased their overall tax burden and may potentially harm the growth of the industry. Some even fear that the new tax scheme may drive punters and operators into underground or unregulated channels.

The 10% withholding tax on winnings from lotteries, games of chance, and sports betting in Ghana raises several questions regarding its implementation, fairness, and impact on the industry. The government must take appropriate measures to address these concerns and ensure that this tax regime becomes an effective tool in generating revenue without hindering the growth of the gaming and sports betting sectors in the country. However, the question is will the revenue granted from this tax be used for the development of the country and whether there will be accountability on the side of the Ghana Revenue Authority and government?

PIUS SELASI GBLI