In Ghana, gambling is legal for adults but illegal for minors. Thus, persons below the age of 18 years are prohibited from staking a bet. Section 48 of the Gaming Act, 2006 (Act 721) makes it clear that a person responsible for a gambling machine shall not permit a child to use the gambling machine or enter a place where it is operated.
Significantly is the fact that Section 72 of the Gaming Act interprets a child to mean a person under the age of eighteen years. Thus far, the introduction of the new taxes is intended to affect Ghanaian punters beyond the ages of 18 years and above who partake in legal gambling.
Ghana’s Gaming industry continues to see significant growth at the rapid speed of light. The number of gamers in Ghana including Casinos, Sports Betting, and other Games of Chance spread across the country. This is as a result of operators’ use of sophisticated technology and extensive investment in advertisement.
In light of the above development, the government has sought to introduce a new tax regime to boost internal revenue mobilization. The new tax aims to introduce a withholding tax of ten per cent (10%) on all winnings and twenty per cent (20%) on Gross Gaming Revenue.
The introduction of the new tax is captured in the Income Tax (Amendment) Act 2023 (Act 1094). It is significant to mention that, before the passage of this law, authorities had in previous Act, that is, the Value Added Tax (Amendment) (No.2) Act, 2022 (Act 1087), exempted the gaming industry from VAT computation or its application.
However, the Income Tax (Amendment) Act, 2023 (Act 1094) provides that winnings from betting, lottery and games of chances will now be subjected to a 10% withholding tax at the point of pay-out. Thus, every legal punter shall be subjected to a ten per cent (10%) withholding on all his winnings.
Further, the Amendment Act explicitly states that a person’s income from lottery operations is subject to tax at the rate of twenty per cent (20%) on the gross gaming revenue (GGR). Gross Gaming Revenue is defined in Section 3 of 100A of the Amendment Act as the total amount staked or wagered, less prices or winnings paid or payable. However, subsection 4 of 100A states that, where a person has chargeable income other than from a lottery operation, the person shall be charged separately in accordance with Section 1 of 100A which states that, the gains and profits of a person engaged in a lottery operation for a year of assessment shall be the total amount staked or wagered.
In line with the above, the Practice Notes of the Ghana Revenue Authority issued presents the following for the successful implementation of the tax component relating to GGR.
- All lottery Operators (excluding the National Lottery Authority) are required to pay the Gross Gaming Revenue Tax to the Ghana Revenue Authority.
- Both return and tax are due by the 15th day of the month following the month in which the GGR transaction relates. The first return and payment is due by the 15th of June 2023
- At the end of each year, all lottery operators are required to file annual GGR tax returns and pay any tax outstanding. The annual return and any tax payable are due not later after the year of assessment.
- Where negative GGR is recorded in a particular month, the operator is allowed to carry forward the negative GGR in the subsequent month (s) by deducting it from a positive GGR recorded. In effect, the operator may not be liable to tax on GGR for the month in which the negative GGR was recorded.
Regarding the implementation of the ten per cent (10%) withholding tax, the following are applicable:
- All Lottery Operators who pay winnings from Casino, route operations, marketing promotion and other games of chance are to withhold tax from the final gross pay-out to players/punters are the rate of 10% of the gross winnings.
- The return for the withholding tax on gross winnings is due by the 15th day of the month in which the withholding tax transaction relates. The first return on withholding is due by the 15th of July 2023
However, for sports betting, National Lottery Authority and Private Lotto Operators, they are required to withhold tax on gross winnings of players/punters from 1st day of July 2023. The return for withholding tax on gross winnings is due on the 15th day of the month following the month in which the withholding tax transaction relates. As such, for the sports betting companies, the application of the 10% withholding tax commences on the 15th day of August 2023.
It is important to consider that a lottery operator who has no withholding tax obligation for a particular month shall file a “Nil” return with the Commissioner-General by the 15th day of the month following.
Local Legal Representatives (LLR)
It is advisable for an entity, be it an individual or corporate body seeking to set up an entity to operate gaming, to submit to the industry’s regulatory regime. As such, it is expedient for a company in Ghana to have access to legal representation for timely legal advice. The legal representative must be a lawyer with in-depth knowledge and workings of gaming law.
Engaging an industry expert to remain compliant and successfully pursue the business to which it has been granted a license is compelling. The offices of Legalstone Solicitors remain ready to assist.
Legal Notice
The contents of this publication, current at the date of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your particular circumstances should always be sought separately before taking any action based on this publication.
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