The management of KGL Technology Limited, a subsidiary of the KGL Group, has appealed to the Government of Ghana to review the imposition of the new:
1. 20% Income tax on the "Gross Gaming Revenue" of lottery, betting and gaming companies. And
2. 10% Withholding Tax on winnings from lottery, betting and games of chance at the point of payout.
KGL Technology Limited currently operates as a digital lotto marketing and markets lottery for and on behalf of the National Lottery Authority. According to KGL, these new taxes are counterproductive as the tax policy on lottery will directly impact the revenue mobilization efforts of the government in the lottery and gaming industry. Projections suggest a drastic reduction in revenue factoring in reduced consumer patronage trend owing to patrons feeling disenfranchised with the potential of quitting lottery play altogether. This will ultimately result in a negative effect on the contribution of lottery revenue to the Consolidated Fund.
Globally, case studies have shown that countries that tax lottery and other games of chance do so on the "Net Gaming Revenue" and not on "Gross Gaming Revenue" as the Government of Ghana is seeking to implement for the Ghanaian lottery and game of chance industry.
There is little to no precedent of this globally. Referencing the United Kingdom, there are no taxes applied on lottery and game winnings, regardless of the game time whether basic lottery ticket, scratch card or even the EuroMillions jackpot. In this case, any profits made from buying lottery tickets, legally classed as gambling, are exempt from tax.
In the United States of America case study also, it is only when non-US citizens win the lottery that a 30% is held back if the win amount goes over $1,200. In this case, the winner is expected to file a claim with the IRS for a refund. In some states such as California, there are generally no taxes for lottery prizes, but winners are required to pay a percentage across board as federal tax.
In retrospect, the Government can be commended for lifting the 5% Withholding Tax imposed on all lotto winnings exceeding GHC2,592 through the 2018 Budget, as well as by removing the 7.5% tax on the 20% lotto commission applied to the Lotto Marketing Companies.
The rationale of the change in Government’s stance towards taxing lottery and games of chance with the 20% income tax on "Gross Gaming Revenue" of lottery companies and a further 10% Withholding Tax on winnings from lottery at the point of payout is clearly counterproductive.
KGL Technology Limited as a corporate citizen is fully committed to tax payment as a business entity and evidence of its tax compliance lends credence to this fact.
KGL Technology Limited is fully committed to the payments of :
• 25% Corporate Income Taxes
• 30% of revenue to the Consolidated Fund through the National Lottery Authority (NLA).
• Fees to Telecommunication Companies
• GHC3 million to the Lotto Marketing Companies.
The KGL Group has observed the many welfare issues plaguing the Lotto Marketing Companies in Ghana that urgently requires Government’s attention and subsequent intervention. As such, suggests to Government to re-examine for a possible review of these actions and also engage all relevant stakeholders for a possible way forward. These taxes if upheld will most likely have dire consequences across board for the lottery and gaming industry.
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