KAMPALA, UGANDA: Parliament has passed the Lotteries and Gaming (Amendment) Bill, 2023 which will revise the existing tax of 20 per cent under the existing law to 30 per cent for gaming activity.
Clause 48(1) of the Lotteries and Gaming Act, 2016 states that ‘an operator of a casino, gaming or betting activity issued with a licence under this Act shall, in addition to taxes prescribed by law, pay a gaming tax at the rate prescribed in Schedule 4’.
Schedule 4 of the existing law prescribes the rate of tax as 20 per cent of the total amount of money staked, less the payouts/winnings, for the period of filing returns.
While presenting a report on the Bill during on Thursday, 04 May 2023, the Deputy Chairperson of the Finance Committee, Hon. Jane Pacutho said the 20 per cent tax rate will be maintained on sports betting.
She added that there are multiple start and stop points within some games which makes it hard to enforce the tax point for winnings, including punter sessions for games like roulettes, poker and slots.
“Consequently, casinos are instead using the end-of-day reconciliations to account for withholding tax which would only be on the days when they have made losses. Such an occurrence is highly unlikely for a casino because betting/gaming companies are always winning,” reads the committee report in part.
The committee emphasized the need to adjust the current policy and ensure the tax is only imposed on winnings and not the staked amounts.
“To plug this revenue leakage, the measure proposes to remove the 15 per cent withholding tax on payments for winnings of gaming and instead increase the gaming tax to a rate of 30 per cent across the gaming sector,” Pacutho said.
The gaming industry in Uganda has expanded rapidly in recent years, owing in part to the growing popularity of sports betting and online gambling.
According to the Uganda Revenue Authority (URA) annual revenue performance report for the 2021/22 financial year, there was a surplus in tax collected from casinos, which resulted in a significant increase in revenue attributed to gaming tax arrears recovery amounting to Shs35.65b.
This growth resulted in a surplus of Shs22.67b and was caused by compliance enforcement actions that made taxpayers file and make payments, as opposed to prior periods when some taxpayers would only make estimated payments.
URA also indicated that Shs53.68b was collected, increasing by 303.41 per cent, the highest percentage increase in tax heads in the last financial year, followed by rental income tax, which increased by 33.15 percent from Shs156.1b.
However, some critics have often argued that the gaming industry has negative social and economic consequences, particularly for vulnerable populations.
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