What you need to know about the new 10% tax on betting

On Tuesday, August 8, 2023, the Ghana Revenue Authority announced a 10% tax on all lottery and sports betting winnings. It was scheduled to go into effect on August 15. This move forms part of government measures to widen the tax net and increase domestic revenue.

According to the Commissioner General of the GRA, Edward Appenteng, the initial stages of implementation of the tax is expected to rack up to GH¢1.2 billion.

The introduction of the 10% tax has been met with a lot of backlash and concerns about the potential impact the tax might have on winnings and the broader betting industry.

The youth wing of the opposition National Democratic Congress (NDC) has heavily criticised the new tax intervention arguing that it affects the youth who rely on sports betting as a source of livelihood and a form of entertainment in most cases.

Prior to the statement from the NDC youth wing, the NDC’s flagbearer, John Mahama, in a recent rally in Accra, criticised the tax, stating that winnings on betting are what is sustaining the teeming unemployed youth in the country.

Fact-Check Ghana presents some key facts you need to know about the 10% withholding tax on winnings of games of betting.

1. The tax is a reintroduction of an existing withholding tax that has been in existence since 2015.
2. The 10% tax is to replace the Value Added Tax, (Amendment) No.2 Act, 2022 (Act 1087). The Value Added Tax, (Amendment) No.2 Act, 2022 (Act 1087) was a 15% tax imposed on the amount of money staked by punters. The act was later reviewed to remove betting and other games of chance from the scope of VAT.
3. It forms part of the new tax bills that were passed by Parliament on Friday 31st March 2023.
4. Unlike, the initial tax scheme that was imposed on the amount staked, the 10% withholding tax is imposed on winnings. This means that the tax will be deducted from the profit and not from the entire payout or from the investment (amount staked). In essence, if a punter stakes 200 cedis and wins 2,000 cedis, 10% will be deducted from 1,800 cedis (which is the profit) and not the entire 2,000 cedis.
5. Per the law, the tax is imposed on all winnings made from games of chance including winnings made from games by the National Lottery Authority (NLA).
6. The operator (betting company) who is paying the winnings withholds 10% of the winnings and pays it to the GRA at the end of the month.
7. Betting companies are also subjected to paying 20% of their revenue as part of the new tax regime.

The new tax intervention is a result of the amendment of various tax acts starting from the amendment of the Income Tax Act, 2015 (Act 896) to the Income Tax (Amendment) Bill, 2022. Among other things, the amendment was to introduce a withholding tax rate on winnings from the lottery.