Civil groups propose return of 20% withholding tax for gaming industry in 2024 budget submissions

Civil Society Organisations (CSOs) have proposed to government that the 20 percent withholding tax on the gaming and betting industry must next year be returned as a way of increasing revenue collection.

The CSOs have also proposed the introduction of punitive measures to businesses for failure to use Electronic Fiscal Devices (EFDs).

In a joint submission for the 2024 national budget framework on Friday, Centre for Trade Policy and Development (CTPD) and the Zambia Tax Platform (ZTP) proposed that the gaming and betting industry was a potential area for revenue mobilisation.

In the 2023 national budget, government reduced withholding tax on winnings from gaming and betting reduced to 15 percent from 20 percent.

CTPD and ZTP however, through their representative, Ellen Makinishi, summitted that the idea of the reduction was to encourage compliance, but mentioned that this was misplaced, and the reversion must take place.

Makinishi argued that the gaming and betting industry was viewed as a luxury expenditure, implying that players who choose to participate in such activities had often the financial capacity to pay higher taxes.

“The government must increase on alternative ways to increase compliance and introduce punitive measures. Also, enhance monitoring of the companies involved within the sector,” she said.

Meanwhile, Makinishi submitted that the use of EFDs to enhance Value Added Tax (VAT) compliance among business owners had a very low uptake.

She therefore proposed that punitive measures should be applied due to failure to comply.

“The government should put in place punitive measures for those that are not using EFDs. To add on, in capturing the informal sector, ensure that more businesses formalise for easier targeting while working closely with PACRA,” she said.

Makinishi however suggested that the Zambia Revenue Authority (ZRA) must first raise awareness on the sue of EFDs before the punitive measures were affected.

The Platform, she said, identified gaps in EFDs implementation such as limited awareness and training on the benefits of EFDs, the cost of acquiring and maintaining EFDs may be high for small businesses.

“In raising awareness, ZRA may consider having a window to sensitize (for example six months) the public and punitive measures to follow due to failure to comply,” she submitted.

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