Taxation in Tanzania not Economically Viable

The current Taxation laws in Tanzania do not provide an economically viable model for operators or consumers. Some of the biggest impacts of such taxation is that customers will stop betting with Tanzanian operators. However, whilst they may stop betting with local operators – they will not stop betting altogether. Instead, players will seek out online operators who are licensed in other jurisdictions (both in Africa and in Europe) where such taxes are not applicable.

Players will have no choice but to partake in games offered by illegal, black market operators within Tanzanian borders.

The result of this will be an increase in the risk of criminality and at the same time, an enormous reduction in the potential tax revenues that the government is able to collect from legal betting operations.

By promoting a fair tax rate and structure for all operators and all types of gaming, such risks will be minimized.

Some jurisdictions in Europe have sought to address these dangers by introducing barriers such as Internet Service Provider and Financial Transaction restrictions. All of these operators have faced varying degrees of failure as very few of their domestic markets have been able to offer credible alternatives for customers. This view has been shared by the European Comission.

By adopting this taxation, there will be no increase in revenues for the reason that operators who are responsible for paying such taxes will not be able to operate.

The current tax system is very much out of line with that which has been adopted across a number of European Union markets, and which has been adopted by an EU Member State. If some EU Member State adopts such kinds of taxation, it would be found to be in breach of EU law.

In contrast, there are now an increasing number of EU Member States where reasonable tax regimes based on Gross Profits of companies have begun to deliver sustainable tax revenues for governments. For Example:

  • In 2015-16 the UK Government is estimated to raise 500 to 700 million Euro’s in Gambling tAx from online gamine companies. This shows that an EU compliant regime can be put in place in which companies can be successful and can afford to pay significant amounts of tax to the governments involved.

In addition, there are players who indulge in games of chance professionally. They make their living out of it and this is their basic source of income. They are people who time after time beat the betting shops and casinos. They bet, play poker, blackjack, etc.

They play professionally and do not lose money (6 to 12 month period). Their basic income may come from the game of chance, however, they are able to make considerable earnings even if there are not many of these people in the market.

As a result of this, the solution applied in certain EU countries is taxation of the winnings from betting odds higher than 100 as only they represent real winnings, the extra profit and the true earnings for the player (small investment vs. big winning).

One of the ways that non-professional players could make profit from the game of chance is to make an extremely big winning with a little investment, which is essentially considered as extra profit. For example, he invests 1 EUR (Approx. 2500 TSHs) and wins 15,000 EUR (Approx. 37,100,000 TSHs) and such a player has by all means ‘beaten’ the house.

With this in mind, The Tanzanian Sports Betting association will provide suggestion and a forum whereby licensed operators in the United Republic of Tanzania will be able to enter into dialogue with The Gaming Board of Tanzania to develop appropriate long-term tax structures and revenues for the government without severely damaging the Sports Betting and Gaming industries in Tanzania.