Expert warns heavy-handed gambling tax could backfire

While the National Treasury aims to catch up to the trillion-rand online gambling industry with a proposed 20% new tax, a lack of enforcement and cooperation could be its downfall.

The online gambling market has surged over recent years, with the South African Reserve Bank estimating total turnover at R1.5 trillion in the 2024/25 financial year.

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The proposed tax will affect gross gambling revenue, which means that operators will pay 20% of the amount they keep after paying out winnings, not the total amount wagered. 

Devakalyani Moodley, Senior Manager at Forvis Mazars, emphasised the importance of enforcement and cooperation from all stakeholders involved, including operators, banks, and payment platforms.

“Currently, gambling is taxed at a provincial level at a certain percentage; each province puts in a specific percentage, and on top of that, the Treasury is proposing an additional 20%.

"It needs to be something that's agreed on and cooperated with from all individuals, not something that comes down as a heavy hammer," she said.

Moodley warned that too much pushback from the government could have the opposite effect by driving users to offshore industries.

“Treasury should prioritise learning from other countries and other countries’ experiences on designing an effective tax system… so that it does not take away from the good that it is intended to create.”

To listen to Moodley on CapeTalk, use the audio player below: