By: Charity Kauseni
Betting has become a new way of life. Betting is an act of gambling money on the outcome of a race, game or other unpredictable events. With massive digitalization taking place at all fronts, betting has become an integral part of survival among Zambians youths.
With several companies investing in the gambling business across the country’s ten provinces, youths have found betting even easier as it is just a matter of having access to the internet. The country is ravaged with high youth unemployment and such initiatives serve as a small source of income.
At the realization that gambling companies were making huge profits, the Zambian government amended the Income Tax Act in 2014 to introduce the requirement to deduct a withholding tax at the rate of 20% on winnings from gaming, lotteries and betting.
However, the Patriotic Front government grew cold feet to enforce the new amendment. For its commitment to return the country to constitutionalism, the new Hakainde Hichilema government enforced the amendment early this month.
Under the 2014 amended Income Tax, all winnings from gaming, lotteries, and betting in money or money’s worth shall be subject to withholding tax. Examples include winnings from raffle draws, commercial promotions, and radio/television promotions, or winnings from any other game of chance.
Additionally, where the winning is in the form of a service or anything like a house, car, holiday package, the tax shall be levied on the value of the service or the good respectively.
However, this move has attracted sharp reactions from Zambians of limited knowledge about their country’s laws and governance issues. Youths feel that the 20% is way to much arguing that betting is an only sure way of survival given the prevailing high cost of living and unemployment.
A number of people took to social media to express their disappointment with the decision by the new government and betting companies to effect the 20% tax rate.
Clarifying the matter, Zambia Revenue Authority (ZRA) Communications manager Topsy Sikalinda said in a statement that the taxes on gaming and betting have been in existence since 2014.
“The Zambia Revenue Authority has noted with concern misleading statements related to taxes on gaming and betting sub-sector of our economy. The last amendment was done in 2020 September by then, Minister of Finance was on the floor of parliament as he presented the budget for the subsequent year. The taxes are paid at the rate of 20% of free money won and not on the total investment (a bet placed). The taxation of Gaming and Betting is contained in section sixty-four A of the Income Tax Act and the Income Tax (Betting and Gaming) (Presumptive Tax) Regulations of 2018,” he said.
And a number of people spoken to complained about the development. Patson Mwape, a youth based in Lusaka urged the government to re-think its decision explaining that betting means survival to many young people.
“Youths for now don’t have jobs. Most of the youths depend on betting to survive, just to source that K50 to make a ticket, some sweat, then government just comes in to eat from the sweat of a poor youth who struggles to get a stake to make a ticket,” complained Mwape.
Peter Sinkamba, opposition Green Party president reacted to the development by saying, “As the Green Party, we are extremely disheartened that UPND Government has decided to indiscriminately decided to impose a 20% withholding tax on any amount that is won through betting, without regard to budgetary and constitutional imperatives.We would like to remind you that all taxes in a given financial year must be approved by Parliament.With respect to the 2021 Financial Year, Parliament directed that no revenue amounting up to K4 000 should be subjected to any direct tax (see page 25 of the Budget Speech 2021). This measure was taken by the previous Government to increase the disposal income of our people.”
The opposition leader further demanded that the indicriminate measure government has taken to levy withholding tax be withdrawn until there is a mechanism which will ensures that only persons who cumulatively win above K4,000.
Zambians have continued to call on president Hichilema to revise this decision, with others demanding that refunds for all persons that have been levied contrary to the constitution.
Some Zambians have called the 2014 Income Tax amendment as a “sin tax ” which is imposed on potentially harmful goods or activities to reduce consumption, while raising additional revenue for government.
