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NLA exempted from 10% tax, private lotto operators demand same

The National Lottery Authority’s (NLA) 5/90 game has been exempted from the 10% withholding tax imposed on the gross winnings from all Betting, Gaming, Lotto, and other Games of Chance.

Private lotto operators and third party collaborators operating NLA’s 5/90 game will also not pay the 10% tax on wins as NLA is exempted from it.

NLA exempted

A statement issued by NLA said this means patrons who stake NLA’s 5/90 game and win will not pay the 10% tax.

NLA pledges to partner Ghana Revenue Authority (GRA) to ensure that all private Lotto operators and third party collaborators comply with the new directive.

The Authority warned that in collaboration with GRA, security agencies will clampdown on all illegal lotto operators and prosecute them in accordance with the law.

NLA supports YouStart with GH¢10m

NLA supports vital government programmes. Last year, it supported YouStart with GH¢10 million and intends to support with same amount this year.

It also invests heavily in corporate social responsibility through its Good Causes Foundation.

Licensed private lotto operators cry foul

Licensed private lotto operators not operating NLA’s 5/90 game are worried that the 10% will have negative impact on licensed lotto operators.

This is because; licensed companies operating lotto legally already pay taxes.

The fear 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.

The 10% tax on winnings will weaken the licensed operators while emboldening illegal lotto operators.

GRA has announced plans to commence implementation of the tax effective August 15 this year.

The Withholding Tax deduction will apply to winnings paid or payable by Private Lotto Operators, Sports Betting Operators, Casino Operators, and Route Operators.

Others are Remote Interactive Games Operators, Operators of Marketing Promotions, and Operators of Other Games of Chance.

Some operators in the industry, including Casinos, Route Operations, Marketing Promotions started the implementation of the policy on June 1, 2023.

However, Sports Betting and Private Lotto Operations are expected to commence implementation from  August 15, 2023.

The move is in line with the passage of the Income Tax (Amendment) (No. 2) Act, 2023 (Act 1094), which allowed the Authority to implement some tax policy initiatives to boost domestic revenue mobilization.

History of lottery tax since 2015

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

Lottery is seen as an investment, and any returns from such activities is taxable.

Unfortunately, losses from lottery are not recognised under the law.

GH₵1bn lottery industry

The total lottery market in Ghana is estimated at about GH₵1 billion annually.

NLA rakes in GH₵290m in 2022

In the 2022 financial year, National National Lottery Authority (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.

GH₵350m illegal lottery industry

The illegal lottery business in Ghana estimated at GH₵‎350 million a year is depriving the government of the needed revenue.

The remaining GH₵300 million is expected to be made by some 12 Private Lotto Operators (PLOs) licenced by NLA this year.

Lottery wins can rise to as high as 70% of total revenue in some years.

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