1 00:00:00,040 --> 00:00:04,960 Speaker 1: We are seeing online gambling making up the majority of 2 00:00:05,000 --> 00:00:08,320 Speaker 1: the gross gaming revenue in South Africa. It now accounts 3 00:00:08,320 --> 00:00:13,480 Speaker 1: for seventy percent of all gambling in South Africa. And 4 00:00:13,520 --> 00:00:17,360 Speaker 1: there has been a proposal that should see a twenty 5 00:00:17,400 --> 00:00:22,600 Speaker 1: percent tax on all winnings I suppose, and gaming online 6 00:00:23,040 --> 00:00:28,440 Speaker 1: tax consultants rather concerned with what this will mean, joining 7 00:00:28,520 --> 00:00:30,960 Speaker 1: us from tax consulting. Essay is partner and head of 8 00:00:30,960 --> 00:00:35,839 Speaker 1: strategic Engagement and compliance. This is Joshuin by jew Joshuan 9 00:00:35,880 --> 00:00:37,640 Speaker 1: A very good afternoon and welcome to the show. 10 00:00:38,640 --> 00:00:41,360 Speaker 2: Good afternoon, Africa and the listeners. Thanks for having me on. 11 00:00:41,720 --> 00:00:46,960 Speaker 1: Given the amount of money that is generated by gaming, 12 00:00:47,000 --> 00:00:50,680 Speaker 1: I suppose we could see upwards of ten billion rand 13 00:00:50,880 --> 00:00:54,360 Speaker 1: of tax revenues from the sector should there be an 14 00:00:54,400 --> 00:00:58,640 Speaker 1: introduction of a twenty percent tax on gaming. Is this 15 00:00:58,720 --> 00:01:01,120 Speaker 1: going to be a good move for do you think. 16 00:01:02,480 --> 00:01:06,200 Speaker 2: So? It boils down to a balancing act. And the 17 00:01:06,240 --> 00:01:10,440 Speaker 2: reason I say that is while similar to many years 18 00:01:10,480 --> 00:01:13,160 Speaker 2: ago when we were trying to drive up foreign direct investment, 19 00:01:14,040 --> 00:01:17,400 Speaker 2: while it could act in such a mechanism that it 20 00:01:17,440 --> 00:01:22,400 Speaker 2: actually drives out online betting platforms. I mean we've already 21 00:01:22,440 --> 00:01:26,440 Speaker 2: got this existing provincial gambling tax right, changing from a 22 00:01:26,520 --> 00:01:29,080 Speaker 2: six to nine percent for online betting ten to fifteen 23 00:01:29,120 --> 00:01:31,760 Speaker 2: for casino gambling. Casino is a little bit easier to 24 00:01:31,800 --> 00:01:35,200 Speaker 2: regulate because they're you know, they're physically there, whereas the 25 00:01:35,280 --> 00:01:39,000 Speaker 2: online sector, while one, you've got this minimal tax already 26 00:01:39,400 --> 00:01:42,440 Speaker 2: and if you are trying to then push another twenty 27 00:01:42,520 --> 00:01:46,880 Speaker 2: percent on that, online is very easy to decentralize and 28 00:01:46,959 --> 00:01:51,880 Speaker 2: move offshore, whereas your actual structural casinos, your physical casinos, 29 00:01:51,880 --> 00:01:55,000 Speaker 2: can't do the same thing. So it then gives your 30 00:01:55,040 --> 00:02:00,720 Speaker 2: online betting platforms a bit of a distinct advantage. 31 00:02:01,960 --> 00:02:04,080 Speaker 1: Yet there's all this money then that we should not 32 00:02:04,160 --> 00:02:07,680 Speaker 1: be taxing because it might run the risk of I 33 00:02:07,720 --> 00:02:12,760 Speaker 1: suppose displaying displacing rather that online betting right, it means 34 00:02:12,840 --> 00:02:16,120 Speaker 1: that instead of it happening within the borders of South Africa, 35 00:02:16,200 --> 00:02:20,440 Speaker 1: the companies operating them that might operate in other countries 36 00:02:20,480 --> 00:02:23,400 Speaker 1: on the African continent or even elsewhere in the world. 37 00:02:23,400 --> 00:02:27,960 Speaker 1: It doesn't necessarily stop South Africans from gambling, because that's 38 00:02:28,000 --> 00:02:31,200 Speaker 1: the other consideration is there, is it not the government 39 00:02:31,240 --> 00:02:34,200 Speaker 1: has to be concernsually by the amount of gambling that 40 00:02:34,320 --> 00:02:35,560 Speaker 1: is taking place in South Africa. 41 00:02:35,600 --> 00:02:39,840 Speaker 2: At the moment, you are correct. And I mean, on 42 00:02:40,000 --> 00:02:43,480 Speaker 2: the one hand, you've got the argument to say, well, 43 00:02:43,560 --> 00:02:46,200 Speaker 2: you know, there's a word of gambling addiction in South Africa, 44 00:02:46,280 --> 00:02:50,760 Speaker 2: there's financial illiteracy resulting in gambling overspending going into credit. 45 00:02:51,160 --> 00:02:55,799 Speaker 2: So the regulation, you know, would would be great if 46 00:02:55,840 --> 00:02:59,320 Speaker 2: it if it worked and limited those on your actual gamblers. 47 00:02:59,560 --> 00:03:04,280 Speaker 2: But instead it's imposing a higher tariff on the casino, 48 00:03:04,480 --> 00:03:08,680 Speaker 2: on the platform itself. So as much as it would 49 00:03:09,520 --> 00:03:12,359 Speaker 2: dampen the need to well not the need to, but 50 00:03:12,720 --> 00:03:16,440 Speaker 2: the kind of the desire to gamble, we we better 51 00:03:16,480 --> 00:03:19,600 Speaker 2: then balance that with well, can we really strengthen the 52 00:03:19,680 --> 00:03:23,959 Speaker 2: enforcement to prevent migration to illegal platforms, because you think 53 00:03:24,000 --> 00:03:26,359 Speaker 2: about it, an addict will find a way to get 54 00:03:26,360 --> 00:03:29,440 Speaker 2: their fix. However they do that, but they're going to 55 00:03:29,440 --> 00:03:32,240 Speaker 2: find a way to get their fix. And when we 56 00:03:32,280 --> 00:03:35,080 Speaker 2: look at at at the gambling tax specifically, I mean 57 00:03:35,200 --> 00:03:39,960 Speaker 2: propose twenty percent, it's a big one. It's it takes 58 00:03:40,000 --> 00:03:43,000 Speaker 2: me back to years ago when you know, they started 59 00:03:43,040 --> 00:03:47,320 Speaker 2: talking about a specific tax of cryptocurrency. A few years 60 00:03:47,320 --> 00:03:50,760 Speaker 2: before there are specific valve tax, you know, and and 61 00:03:50,920 --> 00:03:53,360 Speaker 2: the threat of that valve tax, well, we saw a 62 00:03:53,360 --> 00:03:56,840 Speaker 2: bit of an exodus of your high valve individuals. There 63 00:03:56,880 --> 00:03:59,120 Speaker 2: of a crypto tax. We saw guys trying to use 64 00:03:59,160 --> 00:04:02,400 Speaker 2: offshore platforms like a kraken. So what is there to 65 00:04:02,480 --> 00:04:05,160 Speaker 2: say that history will not repeat itself and this will 66 00:04:05,200 --> 00:04:07,640 Speaker 2: actually be a double edged sword for the government. 67 00:04:09,520 --> 00:04:12,680 Speaker 1: I keep on going back to that, all that potential 68 00:04:12,880 --> 00:04:15,680 Speaker 1: tax revenue. We do know that the government has had 69 00:04:15,720 --> 00:04:19,599 Speaker 1: to obviously relieve us of some of the fuel levee 70 00:04:19,760 --> 00:04:24,440 Speaker 1: as well as the Road Accident Fund levee in order 71 00:04:24,480 --> 00:04:27,720 Speaker 1: to mitigate against the impact of the increase of the 72 00:04:27,760 --> 00:04:31,000 Speaker 1: price of fuel on the first of April. What will 73 00:04:31,000 --> 00:04:33,360 Speaker 1: happen on the sixth of May, I suppose any time 74 00:04:33,360 --> 00:04:36,120 Speaker 1: will tell and whether or not the deadline set by 75 00:04:36,160 --> 00:04:38,840 Speaker 1: the US President in a couple of hours is going 76 00:04:38,880 --> 00:04:42,120 Speaker 1: to be realized or not. Government will need to find 77 00:04:42,160 --> 00:04:43,920 Speaker 1: alternative sources of revenue, won't they. 78 00:04:45,440 --> 00:04:50,000 Speaker 2: So ten billion in potential additional tax revenue is very attractive, 79 00:04:50,040 --> 00:04:51,960 Speaker 2: I think, I think we all agree on that. But 80 00:04:52,080 --> 00:04:55,200 Speaker 2: at the same time, I mean, Salza's last revenue results 81 00:04:55,240 --> 00:05:00,760 Speaker 2: showed five hundred and eighteen billion in outstanding to taxes. 82 00:05:01,440 --> 00:05:04,839 Speaker 2: So with all of their compliance initiatives and programs, I 83 00:05:04,880 --> 00:05:06,800 Speaker 2: mean between last year and this year, year and year 84 00:05:06,839 --> 00:05:10,680 Speaker 2: growth was about twelve point four billion on saus's targeted 85 00:05:10,720 --> 00:05:14,200 Speaker 2: compliance program. So there are other ways to get that revenue, 86 00:05:14,200 --> 00:05:15,839 Speaker 2: but I mean, no one's going to say no to 87 00:05:15,880 --> 00:05:19,400 Speaker 2: an additional ten billion over and above that, especially when 88 00:05:19,680 --> 00:05:23,040 Speaker 2: the purpose is going to be infrastructure. It's going to 89 00:05:23,080 --> 00:05:28,240 Speaker 2: be you know, funding certain social risks and any other 90 00:05:28,320 --> 00:05:32,960 Speaker 2: items associated with gambling addiction. So from a socioeconomic perspective, 91 00:05:33,279 --> 00:05:36,159 Speaker 2: great extra ten billion to be utilized to build that 92 00:05:36,240 --> 00:05:40,839 Speaker 2: infrastructure to potentially assist with gambling addiction in the country 93 00:05:41,200 --> 00:05:46,720 Speaker 2: and other deficiencies and service delivery. But again we get 94 00:05:46,760 --> 00:05:50,040 Speaker 2: back to the enforcement item and what we've seen, and 95 00:05:50,120 --> 00:05:52,760 Speaker 2: this may well be the route to go. We've seen 96 00:05:52,839 --> 00:05:57,479 Speaker 2: great success from SAWS on their segmented taxpayer model, you know, 97 00:05:57,520 --> 00:06:00,680 Speaker 2: the social economy segment, the high net worth segment, the 98 00:06:00,680 --> 00:06:04,680 Speaker 2: crypto revenue augmentation segment. That may be the way to go. 99 00:06:04,920 --> 00:06:08,880 Speaker 2: A new segment just for gambling. Online gambling may be 100 00:06:08,920 --> 00:06:13,159 Speaker 2: subdivided online and casino gambling. But if that segmentation model 101 00:06:13,640 --> 00:06:15,800 Speaker 2: is the way we're looking while, then that takes us 102 00:06:15,800 --> 00:06:17,800 Speaker 2: to the next question as to whether it will be 103 00:06:17,839 --> 00:06:21,040 Speaker 2: treated similar to your corporate income tax. Or you declare 104 00:06:21,040 --> 00:06:23,279 Speaker 2: at the end of a period or provisionally and pay 105 00:06:23,279 --> 00:06:26,880 Speaker 2: your taxes over to souz Or will it operate more 106 00:06:26,880 --> 00:06:30,840 Speaker 2: on a withholding basis for the operator themselves. And if 107 00:06:30,880 --> 00:06:34,320 Speaker 2: we go withholding, that comes with its own complexities, whereas 108 00:06:34,520 --> 00:06:39,120 Speaker 2: more straightforward is declaring it periodically through the year and 109 00:06:39,320 --> 00:06:42,719 Speaker 2: paying over as and when. But then it becomes a 110 00:06:42,760 --> 00:06:47,400 Speaker 2: case of enforcement and traceability, especially with online platforms. 111 00:06:48,000 --> 00:06:50,560 Speaker 1: All right, so many questions to ponder there, Joshuin, thank 112 00:06:50,600 --> 00:06:53,680 Speaker 1: you very much indeed for your insights this afternoon. Joshuan 113 00:06:53,720 --> 00:06:57,039 Speaker 1: by Jou is the partner and Head of Strategic Engagement 114 00:06:57,080 --> 00:06:59,799 Speaker 1: and Compliance at Tax Consulting South Africa.