Africa-Press – South-Africa. The proposed national tax on gambling revenue, which would raise around R10 billion for the government, could have significant negative effects for South Africa.
There is a high likelihood that the tax will push South Africans to use unlicensed offshore providers, potentially increasing the harm to users.
The tax may also prove highly ineffective, with SARS not having existing mechanisms or enforcement infrastructure to clamp down on offshore operators.
As a result, the tax could end up causing more harm than good if its implementation is rushed and heavy-handed, Forvis Mazars senior manager Devakalyani Moodley said.
Moodley explained that gambling revenue is already taxed at a provincial level in South Africa, with various tax rates applying.
The new tax will be placed on top of these existing taxes, significantly increasing the effective tax rate of gambling operators.
The National Treasury has argued that this would significantly ease compliance, as the same data shared with provincial regulators can be distributed to national authorities.
“The new tax is essentially a 20% tax on the amount the operator keeps after paying out winnings. It is not the total amount that is wagered,” Moodley told Cape Talk.
“If you wager R100 and R80 is paid back to the player, the tax is only going to apply to the R20 that the house keeps.”
This new tax is the government’s response to the rapid growth of online gambling over the past few years, with data showing that R1.5 trillion was wagered in South Africa in the 2024/25 financial year.
The National Treasury does not view the tax as a revenue-generating mechanism, although it estimates around R10 billion will be collected.
Instead, it views it as more akin to a sin tax intended to slow the growth of online gambling and limit the destructive behaviour some users engage in.
In this sense, it is similar to the taxes levied on alcohol and tobacco sales in South Africa, which generate a meaningful amount of tax, though the main aim is to reduce engagement with these products.
“The approach and ecosystem of online gambling is a lot bigger and has grown a lot faster than many anticipated. There are a lot of moving parts involved,” Moodley said.
This means taxing gambling revenue in South Africa is not as simple as some think and can result in significant negative consequences for users and the government.
What can go wrong
Moodley explained that the tax liabilities of operators are already relatively complex, and the new national tax will only add to that.
To address some of the issues operators face, the National Treasury will need to work closely with the industry to ensure the new tax does not unnecessarily increase their compliance burdens.
Increasing these burdens could see these operators leave the country and operate using offshore bases, reducing local oversight and any potential additional tax revenue that could be collected.
“Currently, gambling is taxed at a provincial level, with each province setting a specific rate on operators. On top of that, the National Treasury is proposing the 20% national tax,” Moodley said.
“What needs to be kept in mind is that these operators are also paying VAT, corporate income tax, and other taxes. There are a lot of moving parts involved in implementing a sector-specific tax.”
Moodley said the focus now needs to shift to how the national tax is going to be implemented, with the National Treasury’s reasons for the tax being clear.
This will determine how effective the tax will be in reducing harmful gambling behaviour and how much revenue the state will collect.
“From a complexity perspective, it might be easier to impose tighter regulations on the sector and put other systems in place rather than tax specific operators,” Moodley explained.
“The key is how it will be implemented. Will it be implemented at an operator level at the standard tax rate? Is the Treasury going to impose a withholding tax? Or, will it not be on the gross gambling revenue, but based on turnover?”
Moodley said all of this is unclear at the moment, with the gambling industry pushing back on the National Treasury’s proposed tax.
The industry has argued that it will significantly increase its compliance burden and push individuals to use unlicensed offshore operators that will become more competitive.
This can result in individuals bearing the brunt of the tax in terms of pricing, by using local operators, or choosing to use an unlicensed operator that significantly reduces oversight, safety, and the ability for the state to tax earnings.
“They, SARS and the Treasury, are going to need the cooperation and buy-in of licensed operators, banks, and payment platforms,” Moodley said.
“It needs to be something that is coordinated by all individuals and not something that comes down with a heavy hammer.”
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