The management of KGL Technology Ltd, a KGL Group subsidiary, has urged the Ghanaian government to reconsider the implementation of the new:
Lottery, betting, and gaming enterprises are subject to a 20% income tax on their “Gross Gaming Revenue” and a 10% withholding tax at the time prizes are paid out.
Now, KGL Technologies Limited promotes lotteries for and on behalf of the National Lottery Authority as a digital lotto marketing company. KGL claims that these additional levies are ineffective because they will have a negative impact on the government’s efforts to raise money from the lottery and gaming industries.
Forecasts indicate a sharp decline in income due to declining consumer spending, patrons’ alienated attitudes, and the possibility that they will stop playing the lottery altogether. The amount of lottery revenue that is contributed to the Consolidated Fund will ultimately suffer as a result of this.
According to case studies conducted across the world, nations that tax lotteries and other games of chance do so based on “Net Gaming Revenue” rather than “Gross Gaming Revenue,” which is what the government of Ghana is aiming to accomplish for the country’s lottery and gaming sector.
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.
Lottery winnings are typically exempt from state taxes in some jurisdictions, including California, but winners must pay a portion of their winnings in federal taxes.
In retrospect, the Government deserves praise for eliminating the 7.5% tax on the 20% lotto fee charged to Lotto Marketing Firms and the 5% withholding tax imposed on any lottery winnings over GHC2,592.
With a 20% income tax on lottery businesses’ “Gross Gaming Income” and an additional 10% withholding tax applied to lottery prizes at the time of payout, the government’s new approach to taxing lotteries and other games of chance is obviously 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 taken note of the numerous welfare problems afflicting Ghana’s Lotto Marketing Companies, which call for the government’s immediate notice and subsequent intervention. As a result, it is advised that the government reevaluate these acts for potential review and involve all pertinent stakeholders in finding a potential course of action.
If maintained, these levies will very certainly have disastrous effects on the lottery and gaming industries in general.