The Ghana Revenue Authority (GRA) has announced the commencement of a novel tax structure that will see a shift from the prevailing 12% Value Added Tax (VAT) on betting and lottery stakes to a 10% withholding tax on winnings.
This change is set to be enacted under the amended Income Tax Act 2023 (No.2), Act 1094, and will be effective from August 15, 2023.
This revamped taxation strategy aims to streamline the taxation process for betting, lottery, and gaming activities in the country.
As per the newly introduced system, the government will begin imposing a 10% tax on the profits derived from various forms of gambling, including sports betting and lotteries.
This marks a departure from the previous system where VAT was levied on each bet or lottery ticket purchased.
Edward Gyamerah, a representative of the GRA's domestic tax revenue division, emphasized the importance of strict compliance with the new taxation framework for gaming companies.
He cautioned that failure to adhere to the withholding tax regulations could result in the revocation of their licenses.
"As you have been appointed as withholding agents, the obligation is on you to withhold. If you fail to do that…you can be assured that your licenses will be withdrawn," he warned.
The shift to this modified tax regime is anticipated to have multiple implications.
It is expected to simplify the tax collection process for both the government and gaming companies, providing a more transparent and straightforward method of taxation.
Additionally, the change could influence the behaviors of both gamblers and gaming establishments, potentially affecting the profitability of the industry as a whole.
This transition has stirred discussions within the gaming and taxation sectors, with proponents highlighting its potential to enhance revenue collection and ensure a fair distribution of taxes within the industry.
On the other hand, critics express concerns about the broader economic impacts and whether the new system might discourage gambling activities.
The GRA has assured that proper guidance and education will be provided to all relevant stakeholders to facilitate a smooth transition to the new tax framework.
With the August 15 deadline rapidly approaching, gaming companies and players alike are preparing for the implementation of this new tax structure and its implications on the gambling landscape.