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Rwanda has passed a new income tax bill raising the tax on gambling companies from 13% to 40%, to tighten regulation and boost state revenue. The new law amends the 2022 Income Tax Act, targeting gross gambling revenue. Operators are required to declare and pay the tax within 15 days after the end of each month.
According to the government, the goal is to promote accountability and reduce the risk of addiction and other social harms in the gambling sector. However, the notable exemption of national lottery operators from the 40% gambling tax has sparked nationwide debate.
National Lottery Exempted, Lawmakers Question the Logic
The exemption was contentious as the bill passed through the Chamber of Deputies on April 29. MP Odette Uwamariya, Chairperson of the Parliamentary Committee on State Budget and Patrimony, argued that lottery operators already channel 50% of their revenue into the national treasury. With plans to raise it to 60% in motion, an additional tax seems unfair. For her, double taxation was the main reason behind the exemption.
However, MP Théogène Munyangeyo expressed concerns over the blurred lines between lotteries and betting. According to him, many people view the national lottery as a form of gambling, regardless of the government’s stake in it.
“Even those engaged in the lottery, we consider that as betting. But because the government has a stake in it, they have been exempted. A person who wins something in kind is not taxed, but one who wins cash is taxed. Yet the item won can also be sold for money,” Munyangeyo said.
He further explained that in-kind rewards like a motorcycle valued at Rwf2 million can be sold for cash, and therefore carry similar risks of addiction as cash prizes.
Legal Definitions and Revenue Gaps Add Fuel to Debate
According to the 2011 gaming legislation in Rwanda, a national lottery is a scheme owned entirely or partly by the government and operated with official authorization. Lottery operators must have a license and a formal agreement with the state, including terms on how revenue is shared.
Uwamariya defended the exemption by pointing to this legal distinction. “National lottery is distinct in that it is organised under government control and contributes a defined portion of its revenue directly to the treasury,” she said.
She also pointed to the sharp imbalance between what the gambling industry earns and its tax contributions. Since 2013, gambling companies have generated Rwf 260 billion in revenue, but only Rwf 8 billion was collected by the government in taxes. This shows a clear need for tighter rules and higher tax rates to reduce abuse and promote responsible gambling.
Government Says Goal Is Sector Growth Without Harm
Godfrey Kabera, Minister of State in charge of the National Treasury, stated that the changes are not meant to hurt gambling companies, but ensure the sector grows in a responsible way. He stressed that the reforms focus on improving transparency and protecting the public.
“These reforms are not designed to cause losses to those engaged in gambling, but to ensure the sector develops in a responsible and effective way,” Kabera said.
In response to MP Munyangeyo’s concerns about private investors in the lottery, Kabera highlighted that taxing them again would be unfair. Since gross revenue is already taxed before the government takes its share, applying a second tax would place the burden only on private shareholders. “It would be as though they are carrying the tax burden alone, yet we are in the investment together.”
While the new tax law may help regulate gambling and increase revenue, the selective treatment of the national lottery will likely remain a hot topic among lawmakers and the public.
Source: E-play Africa
