The management of KGL Technology Limited, a subsidiary of the KGL Group, has appealed to the government to review the imposition of the new 20% Income Tax on the “Gross Gaming Revenue” of lottery, betting and gaming companies as well as the 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 company and markets lottery for and on behalf of the National Lottery Authority (NLA).
According to KGL, these new taxes are counterproductive as they will impact the revenue mobilisation efforts of the government in the lottery and gaming industry.
Projections also suggest a drastic reduction in revenue due to a decrease in 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.
Backing its stance with some statistics, KGL Technology Limited said global 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 is seeking to implement for the Ghanaian lottery and game of chance industry.
Referencing the United Kingdom, it said there are no taxes applied on lottery and game winnings, regardless of the game time whether basic lottery ticket, scratch card or 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, it is only when non-US citizens win the lottery that a 30% is held back if the win amount is 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 five per cent Withholding Tax imposed on all lotto winnings exceeding GH₵2,592 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.
To this end, KGL Technology Limited as a corporate body is fully committed to paying its tax 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 the 25% Corporate Income Taxes, contributing 30% of revenue to the Consolidated Fund through the National Lottery Authority (NLA), paying its fees to the Telecommunication Companies and giving GH₵3 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, the company is urging government to re-examine its decision for a possible review of these actions and also engage all relevant stakeholders for a way forward.
This is because, these taxes, if upheld will most likely have dire consequences across board for the lottery and gaming industry.
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