Taxing Times?

KaiRo International says African politicians are doing their best to help the fledgling industry

Africa isn’t generally noted for the ease or transparency of its tariff and taxation systems. John A. Robbins of KaiRo International says, however, that politicians in Ghana and Tanzania have been extremely helpful in keeping duties on the gaming industry simple and effective.

“In Tanzania, which was a communist country until it began reforms in the early 1990s, they were very clever,” says Mr Robbins.

“They started with a system where you paid a licence fee for a machine and a licence fee for a table. The policing of that simply involved a guy coming round to count the number of machines and then multiplying it by the fee. Over the years with our help, they’ve now come to a levy system. They’re comfortable that the market has now found its level and are happy with the gaming management systems, which have been approved by the gaming boards in southern Africa. The systems allow a high level of monitoring without the operator needing to have a high powered casino management team in place locally,” he explains.

“Now with the levy system in Tanzania, we pay a basic licence fee, then on top of that a 13% levy on gross gaming win. Because of the automated gaming systems, you can’t avoid declaring what should be declared. We started off the system-based gaming model outside southern Africa, and now the opposition casinos also have to use the same systems, so that the gaming boards are comfortable about being able to collect their revenues. The beauty of that is that we have to pay VAT and other import duties, but no corporation tax, so you get to a level where the returns for the business are very good still.

“With an annual licence fee, plus 13% levy monthly, plus operational costs, you are still going to get returns of 30-36%. It depends on what you put back into the business. I’m sure that with time—they’ve allowed ten years to get to this level—the next thing they will do is to introduce corporation tax,” says Mr Robbins.

“In Ghana, there’s no levy, but there is corporation tax, so it balances itself out. The returns there are still good.”