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Higher Sin Tax on Western Cape Casinos

A tax law applicable to certain casinos in South Africa has just been passed. An amendment to the Western Cape Gambling and Racing Act will ensure that five casinos in the Western Cape are required to pay extra taxes each year. The increase in taxes is expected to generate an extra R25 million per annum from the casinos.

Effectively, a 'sin' tax, the increased rates are being imposed following the amendment in the Western Cape Legislature last week. Six revenue categories will be stipulated and an additional two percent flat tax will be applied to the casinos operating in the province.

There are five casinos that operate in the province of the Western Cape in South Africa and they will be effected by the amendment to the legislation. The largest of the casinos is Grand West in Cape Town. The other affected casinos include ones operating in Caledon, Mossel Bay, Saldanha and Worcester.

Amendment to Increase Percentage of Payable Revenue

According to Alan Winde, Finance, Economic Development and Tourism MEC, the additional R25 million will be used by the Provincial Revenue Fund to improve services. The changes can be broken down into categories, depending on the revenue of the specific casinos.

Casinos with taxable revenue of less than R14.2 million annually will be required to pay eight percent tax. Casinos with taxable revenue of R14.2 to R28.4 million will be required to pay 10.5 percent tax, up from 8.5 percent in previous years. The highest percentage of tax required will be 19 percent, up from 17 percent in past years and this will be implemented for casinos with taxable revenue of R71 million or higher.

In addition to increasing the amount of tax that will be paid by the holders of casino operator licenses, the amendment will also increase the percentage of taxable revenue that is payable.

In 2011-2012, the five casinos in the province declared gross revenue of around R2 billion, resulting in R275 million in taxes paid to the government. The additional taxes will take that amount up near the R300 million mark.

Two Draft Amendments Tabled Last Year

Numerous comments were directed towards the draft amendments that were tabled last year. The Western Cape Eighteenth Gambling and Racing Amendment Bill 2022 came after two draft amendments bills. Comments from interested parties came primarily from the casino industry.

We have decided to abandon previous legislation due to public comment we received," announced Winde. "We have paid due regard to the concerns raised by members of the public."