South Africa Cautions Online Gambling Remains Illegal

While a decision is awaited on the recommendations of the Gambling Review Commission, the Minister of Trade and Industry Rob Davies has warned that online gambling remains illegal in South Africa.

Speaking while attending the International Association of Gaming Regulators’ annual conference in Cape Town, Davies said South Africans should not “jump the gun” on internet gambling simply because the Gambling Review Commission had proposed that the country should allow the licensing of online gambling operators.

Davies pointed out that it was also illegal for online gambling sites to offer their services in South Africa, even though their servers were hosted outside of the country, and added that banks, under the Financial Intelligence Centre Act, could question those South Africans that netted winnings from internet gambling sites.

The Gambling Review Commission had recommended earlier this year that bringing these activities into the regulatory net and providing punters with a choice of licensed operators under a single regulator would be likely to provide an outlet for existing demand, provide some punter protection, and would discourage consumers from seeking out unlicensed sites.

Davies confirmed that regulations have already been developed by his department on online gambling, but that they have been held back, until public hearings on the Gambling Review Commission’s report have been completed.

Bringing online gambling into the regulatory net would also also allow the government to tax the sector. Under current proposals, tax revenues would be generated from licence fees and the taxation of the operators’ profits, as well as a 15% withholding tax on all winnings above ZAR25,000 (USD3,160), which was announced in the 2012 budget and which would take effect from April 1, 2012. The details of that tax are still awaited.

A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report6.asp

TAXtalk: www.taxtalkblog.com

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