The National Lottery Authority (NLA) is worried that the 10% withholding tax imposed on Lottery and Sports Betting wins will have negative impact on licensed lotto operators.
The Authority fears that the tax will drive many players to rather patronise illegal lottery, popularly referred to as Banker to Banker.
This is because, the illegal lotto operators do not pay taxes and therefore wins will not attract the 10% tax.
On March 31, 2023, parliament passed the Income Tax (Amendment) (No.2) bill, 2022.
Among the provisions is the re-introduction of the 10% tax on winnings from lottery that was scrapped in 2017
Lottery is seen as an investment, and any returns from such activities is taxable.
Unfortunately, losses from lottery are not recognised under the law.
Providing an update to the media about the activities of NLA, Director General of NLA, Sammi Awuku said scrapping the tax will attract more people to participate in the authority’s gaming activities.
He disclosed that NLA has presented a proposal on the negative impact of the tax to the Ministry of Finance and Ghana Revenue Authority (GRA) which is being discussed.
He argued that since NLA and licensed companies operating lotto legally already pay taxes, the 10% tax on winnings will weaken them while emboldening illegal lotto operators.
The total lottery market in Ghana is estimated at about GH₵1 billion annually.
The illegal lottery business in Ghana estimated at GH₵350 million a year is depriving the government of the needed revenue.
In the 2022 financial year, NLA, the state owned lottery operator generated some GH₵290 million from the business.
NLA is projecting to rake in GH₵370 million this year.
The remaining GH₵300 million is expected to be made by some 12 Private Lotto Operators (PLOs) licenced by NLA this year.
Since 2015, lottery taxation has gone through several changes – leading to it being repealed in 2017.
In 2015, a withholding tax of five percent was imposed on the winning amount
Then in 2016, arguments were raised that bettors can stake for several times before winning.
Therefore, a threshold needed to be set – above which the winnings would be subjected to tax.
The Income Tax Amendment Act, 2016 (Act 907) amended this provision and exempted the first GH¢2,592; and any excess wining above GH¢2,592 was taxable at five percent.
In 2017, NLA made proposals to the Ministry of Finance for the scrapping of taxes on lottery as a way of attracting more mainstream operators. The tax was then repealed.
The 2023 budget reintroduced this law in two parts.
The first is the taxation of winnings at the rate of 10%.
Again, there is no deduction of losses and no exemption is provided.
