The Finance Act of 2021 has been enacted and has made several amendments to the Gaming Act, Cap 41. These amendments include:
- The reduction of Gaming tax on winnings from 20% to 15%
This amendment will certainly be well perceived by Gaming operators within the country. This is because, the tax on winnings in Tanzania, has been relatively higher compared to other East African countries. This created a serious challenge to bookmakers in Tanzania because an increasing number of players were using foreign platforms to place bets so that they can pay lower taxes when they win. As a direct result of this, gaming operators in Tanzania lost both their competitive advantage and revenue.
The proposed reduction is therefore an important move in ensuring the growth of sports betting within Tanzanian borders. This is because the rate will now be at par with the tax rate in other East African countries including both Kenya and Uganda. This will incentivize more players to gamble within the country and consequently, the revenue for gaming operators in Tanzania will also increase.
- A 5% increase in the gaming tax rate on the Gross gaming revenue (GGR) from 25% to 30%. The 5% increase in tax will contribute to the sports development fund in the country.
This proposal comes after a meeting that was held between the Minister of Information, Culture, Arts, and Sports, Hon. Innocent Bashungwa and the Minister of Finance and planning, Hon. Mwigulu Nchemba on the 27th of April 2021. The main purpose of the meeting was to discuss how gaming activities can contribute to the growth of sports in Tanzania. The newly proposed tax rate is therefore a direct implementation of the objectives discussed in the aforementioned meeting.
Although the proposed amendment will have a significant and direct contribution to the growth of sports, this will not be the first contribution that gaming has had in the sports industry. Sports betting is already well-known for its role in increasing sports viewing. A research conducted by Nielsen showed that the average NFL fan who is a non-bettor watches about 15-16 games a year while the average NFL fan who is a bettor watches 45-50 games a year. Therefore, bettors have a greater incentive to view sports matches compared to other spectators. Gaming operators have also been sponsoring several football clubs in Tanzania. For example, SportPesa has sponsored Young Africans sports club (Yanga), Simba sports club, Namungo FC, and Singida United.
- Imposition of gaming tax on virtual games and on gaming products licensed under pilot study. Both items are to be taxed at the rate of 10% on GGR
Virtual gambling games were permitted in 2019 but there was no confirmed tax rate for these games at the time. In February 2021, the Gaming board proposed a 10% tax on GGR for these activities. According to The Citizen, gaming stakeholders were invited to a meeting with the gaming board to discuss these changes in the taxation of virtual games. The recently proposed amendments show that the tax rate to be imposed has remained in accordance with the rate that the Gaming board had proposed earlier this year. These newly imposed taxes will be added to schedule 2 of the Gaming Act, Cap 41 once they are accepted.