Rwanda has recently passed a new income tax bill aimed at strengthening its tax regime on gambling. This legislation has sparked considerable debate among lawmakers, especially regarding the exemption of national lottery operators from the new gambling tariff. This exemption raises questions about the fairness of tax treatment for different forms of gambling.
Changes in the Legislation
- Increased Tax Rate: The tax on gross gambling revenue has been increased from 13% to 40%. This change is intended to promote responsible gambling and generate additional revenue from the rapidly growing sector.
- Tax Declaration and Payment: Companies involved in gambling must declare their gambling tax according to prescribed procedures and pay the tax due within 15 days after the end of each month.
The bill, approved by the Chamber of Deputies on April 29, exempts national lottery operators from the gross gambling revenue tax. MP Odette Uwamariya, Chairperson of the Parliamentary Committee on State Budget and Patrimony, explained that while lotteries and gambling share similarities, the national lottery is viewed as a government business.
Uwamariya noted that half of the revenue generated by national lottery entities goes to the national treasury, with plans to increase this share to 60%. She argued that imposing additional charges would result in double taxation.
Concerns from Lawmakers
Some lawmakers, including MP Théogène Munyangeyo, have raised concerns about the societal impacts of gambling. Munyangeyo questioned the distinction between lottery and betting, arguing that both can lead to addiction. He pointed out that while cash winnings are taxed, prizes like motorcycles can also contribute to gambling issues without similar tax implications.
Godfrey Kabera, Minister of State in charge of National Treasury, emphasized that the tax reforms are designed to foster a responsible and effective gambling sector without compromising public welfare. He highlighted that since 2013, the gambling sector has generated Rwf260 billion, yet the government has only collected Rwf8 billion in taxes.
Kabera also clarified that taxing private shareholders in lottery operations would unfairly strain them, as the gross revenue tax is applied before any distribution to the treasury. “We are in this investment together,” he stated.
As Rwanda implements these significant tax reforms, the government aims to balance revenue generation with the promotion of responsible gambling practices. The ongoing discussion about tax disparities highlights the complexities involved in regulating this rapidly evolving sector.
