Casinoplusbonus news reporter Luke Weber updates players in South Africa on the possibility of increased VAT added to online gambling.
In an African National Congress (ANC) meeting, Build One South Africa (BOSA) has suggested a rise in taxes on regulated online gambling.
The specific tax raise suggested is on Value Added Tax (VAT).
BOSA feels a 0.5% rise on VAT will help the government increase revenue in order to boost the growth of South Africa’s gambling economy.
The idea supposedly comes as a result of other global gambling authorities using taxes to increase revenue in order to regulate and improve their jurisdictions.
Mmusi Maimane’s rise in taxation was just one suggestion made to help increase revenue surplus for South Africa’s online gambling budget.
He suggests that streamlining regulations would also help. One option in particular is to strengthen the government’s battle against overseas online casinos and sports books.
Again, this brings us back to gambling platforms used by players in South Africa that operate under the regulatory oversight of the MGA and GCB.
For the time being, the African National Congress (ANC) has accepted that there is a need to pursue a viable solution to increase revenue to ensure continued growth.
Criticism of Tax Rises in South Africa
The suggestion of VAT tax increases brought up by Mmusi Maimane on behalf of BOSA has not come without criticism.
iGaming consultant Cameron Green used Kenya as an example of how taxing the industry as an answer to increase revenue streams has had a detrimental effect on the country’s online gambling entertainment industry.
Right now, aggressive taxes on gambling in the country include 15% on Gross Gaming Revenue (GGR) plus 40% corporate taxes. To make matters worse, players have a 20% withholding tax applied to any winnings.
It has resulted in operators leaving the Kenyan market. Also, players in the country are allegedly choosing to play at overseas online casinos, such as those under the regulatory oversight of the Malta Gaming Authority (MGA) and Curacao Gaming Control Board (GCB).
Furthermore, reading between the lines, as we love to do here at Casinoplusbonus, Green suggests that over-taxation could discourage investment and lead to job losses.
We can conclude that Mr Green feels that taxing the gambling industry is not the answer to solving revenue income. He does agree that improving enforcement against overseas casinos is a more viable way forward.
Why is simply raising taxes not a good idea?
As with any situation when a government or authority suggests a rise in tax, the news always tends to stir up mixed opinions. We can see this is the case in South Africa right now.
To give you some other examples, we recently saw the threat of tax hikes in the UK, which thankfully never came to fruition. The newly elected UK government backed down, which we believe is due to the White Paper rules changing the rules of the British Gambling Act 2005.
In India, the taxes players must pay are up to 30%. Many operators and stakeholders in India’s gambling market are saying these taxes are crippling the industry. Many believe online gamblers in the country are choosing to play at overseas casinos where they have a better chance of avoiding the 30% tax.
Also, we have seen iGaming consultant Cameron Green reference the high taxation on gambling in Kenya. As with India, he suggests that these taxes will drive people towards overseas online casinos.
From our point of view, we feel South Africa’s domestic gambling market and licensing structure already has far more systemic issues to deal with. For one, there was Jack Banon’s November 2024 news report – FATF Calls Out South Africa Gambling For Poor AML Checks. In that report, Jack Bannon questions the safety of playing at domestically operated online gambling entertainment platforms in South Africa.
As a result, we are of the opinion that South Africa’s current situation with FATF needs to be rectified before raising taxes. Moreover, we feel that raising taxes is simply going to harm the growth of the country’s domestic gambling economy.
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