The South African government's plan to impose a 20% national tax on online gambling GGR continues to ferment. The industry warns that this new tax, combined with provincial gambling taxes and VAT, will skyrocket the actual tax rate for licensed operators to 38% to 39%, making South Africa one of the heaviest taxed gambling markets in the world. Simply put, the government says it's to curb gambling, but the money goes directly into the national treasury, making the industry feel like a big loser. Want to know about the policy shocks in Africa's largest gambling market? Follow PASA's official website continuously.
Tax calculation: 20% national tax increase, 39% becomes operator's nightmare
Sean Coleman, CEO of the South African Gambling Association, calculated for iGB: Currently, licensed online gambling operators have paid provincial gambling taxes (about 6.5% of gross profit) and 15% VAT, and the adjusted comprehensive tax rate has reached 18% to 19%. Adding another 20% national tax, the effective tax rate will rise to 38% to 39%, far exceeding all international jurisdictions except four countries. Coleman pointed out that the government's proposal analysis completely ignores or overlooks the impact of VAT on the industry. Treasury officials said that this tax is expected to bring in 10 billion rand (about 596 million USD) in revenue each year, which will go directly into the national fiscal revenue pool, helping to alleviate the pressure of raising other taxes, even if it reduces online gambling, it's "a good thing".
Industry doubts: The motive is fiscal revenue, not harm reduction
The Free Market Foundation urges the government to withdraw the proposal, pointing out that the tax revenue is not promised to be used for harm reduction. The surge in online gambling is mainly driven by the socio-economic crisis, with many people using it to make a living. This tax mainly targets licensed gambling companies, not gamblers, and is difficult to enforce against unlicensed offshore casinos, instead pushing players towards unregulated offshore platforms. Experts from South African law firms warn that licensed operators, already paying 15% VAT and provincial gambling taxes, plus the national tax, will severely damage their competitiveness, making the South African online gambling industry one of the highest taxed industries globally. Data from the South African National Gambling Board shows that the national betting amount for the fiscal year 2024/2025 will reach 1.5 trillion rand (about 89 billion USD), with about 34,316 people employed in the gambling industry.
Policy contradiction: Online gambling remains in a legal gray area, yet taxation precedes
South African online gambling remains in a legal gray area as the "National Gambling Amendment Act" has not been enacted. The industry questions how the government can implement taxation without enforcement mechanisms and infrastructure. Coleman finally questioned, if the tax motive is not clearly to increase revenue, why didn't the discussion document propose specific measures to alleviate problem gambling symptoms? "Simply put, this is just a far-fetched reason for national taxation."
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This article is from "PASA-Global iGaming Leaders" gambling industry news channel: https://t.me/pasa_news
Original in-depth gambling channel: https://t.me/gamblingdeep
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PASA Matrix: @pasa002_bot
PASA official website: https://www.pasa.news
