Zimbabwe has proposed and enforced a 10 percent tax on sports betting winnings, effective from January 1, 2025.
The new tax will be calculated on player’s gross winnings every time they get a wager right. Tax to be calculated on gross winnings mean that 10 percent will be deducted any time a player wins, no matter how small the amount put on bet was.
In order to boost collection rates, Zimbabwe is leaving the payment of these taxes on the operators and not consumers. Sports betting companies will be required to withhold the 10 percent tax on winnings and report it to the government.
This will bring up additional administrative responsibilities for the companies to ensure the accurate deduction and timely payment of taxes. Failure to comply could result in penalties or loss of operating licences.
Pressing budget needs
Finance Minister Mthuli Ncube is the primary advocate behind this new tax law. He argued that the additional tax on sports gambling made sense, and it faced pressing budget needs. In addition, he also mentioned that the surging wave of sports gambling in the country has already impacted youths.
The proposal has raised concerns about it driving the people to the black market and pushing players towards websites operating “offshore” that do not pay taxes to the government. It has left the bettors underwhelmed and would leave the experience feel less rewarding.
As part of the taxation, casual bettors might not be as affected as serious or professional bettors. This is because those who place large wagers will get taxed more. This would essentially eat at a significant portion of their net winnings.
Finance Minister Ncube has argued that the additional tax is necessary to address the country’s pressing budgetary needs. Therefore, the 10 percent proposed tax is a move that is part of the government’s efforts to shore up public finances.
According to Ncube, the government needs to generate more revenue, and with the surge in sports betting popularity, the sector presents a viable target for taxation.
This comes as Zimbabwe witnesses a strong rise in sports betting, especially among its youth. The availability of online platforms and easy access to the same has led to a surge in the popularity of the activity. Therefore, the government has turned towards sports betting to tap into the growing market for revenue generation.
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