‘Socially regressive’ Zimbabwe withholding tax hurting lower income players

Presenting Zimbabwe’s 2025 budget to Parliament in November 2024, Finance Minister Mthuli Ncube highlighted a “surging wave” of sports betting in the country. To capitalise on the thriving sector, he proposed Zimbabwe adopt a withholding tax.

Yet, the revenue being generated through the “proliferation” of betting houses in the southern African nation was not flowing directly into the treasury, as punters’ winnings were untaxed. To formalise the industry and help boost revenue collection to meet “pressing budget needs”, he introduced the 10% withholding tax on gross sports betting winnings, one of only four taxes that he announced on that day.  

The tax, which came into force on 1 January, applies to winnings at all local betting shops and via online platforms operated by land-based bookmakers.

The Herald, a local daily, reported on 13 March that Zimbabwe’s gambling industry had generated about $120 million in revenue in 2023, with the online segment contributing $45 million.  

Ncube previously projected the economy could collect up to $15 million annually via the punters’ tax, based on his forecast of $150 million gross winnings in 2025. He said about 300,000 locals engaged in online betting in 2024, up 15% on the prior year, with 60% of bettors being between 18 and 35 years old.

“This growth has been fuelled by rising internet penetration and the accessibility of smartphones, with over 5.2 million devices in use nationwide,” the paper wrote.

Zimbabwe withholding tax will prove costly for operators

To comply with the new tax collection system, Marvellous Tapera, the founder and managing partner of WTS Tax Matrix, a leading Zimbabwean tax consultancy, said bookmakers were required to set up or upgrade their transaction and reporting systems to automatically calculate and withhold the 10% levy on all winning payouts across points of sale and online wallets.

“They also had to enhance accounting and reconciliation workflows to produce accurate monthly returns for ZIMRA (Zimbabwe Revenue Authority), train staff on tax procedures and customer communications, improve cash management and banking for timely remittances, and often consult tax or legal experts to ensure full compliance,” he tells iGB.

“Although feasible, these changes were operationally demanding and particularly costly for smaller operators, requiring significant time and financial resources,” Tapera adds.

Citing an anonymous operator, The Herald’s article reported Zimbabwe’s withholding tax would require a system upgrade costing up to $50,000 per platform. This is in addition to the $20,000 the average bookmaker spends on tax reporting yearly.

Tapera observes the betting tax’s flat structure raises fairness concerns. In its current form, he argues, the tax “is socially regressive” as it affects low-income and casual bettors compared to wealthier participants. It has the potential to squeeze operators’ profit margins and cause them to adjust odds to make up the losses.

“Applying a uniform 10% withholding tax without any exemption is regressive in a low-income economy like Zimbabwe’s, as it risks burdening poorer bettors and driving gambling activity to unregulated platforms,” Tapera adds.

He advises the government to adopt a more nuanced structure like the one proposed in South Africa, which is based on the amount and frequency of players’ winnings.

What can Zimbabwe learn from other African markets?

“South Africa’s model – a 15% withholding tax applied only to winnings above R25,000 – demonstrates how such a safeguard can protect casual players, and Zimbabwe would benefit from implementing a similar threshold or accompanying social protection measures,” Tapera suggests.

“Introducing a minimum exemption threshold or adopting a more progressive structure would make the system fairer while still capturing significant revenue from larger winnings.”

In a release on 5 September, Stats SA, South Africa’s national data agency, said the gambling sector generated $3.4 billion in GGR during the 2023-24 financial year. The latest figures from the National Gambling Board (NGB) in October reported an increase to $4.3 billion for the financial year 2024-25.

South Africa’s government announced the proposal to introduce a tax on winnings in 2011, with the aim being to start collecting it in the following year. The levy targets professional or regular bettors, while seeking to exclude casual punters.  

However, according to Deloitte, the government had not yet implemented the tax in February, due to staunch opposition from the local industry. 

Withholding tax must account for inflation

“The current economic climate, characterised by high unemployment and cost of living, calls for a balance between revenue generation and social protection,” the consultancy said in a 10 February note.

“A withholding tax on individual winnings may provide this balance if carefully structured. The minimum value for taxation should be reconsidered, taking into account inflation over the last 13 years since the first proposal. This will ensure that those gambling to supplement their low income are kept out of this tax net and do not turn to illegal gambling activities, which are completely out of SARS’ (South African Revenue Service) grasp,” the note said

In October, the Kenyan government similarly introduced a 5% withdrawal tax to replace its previous 20% tax on net winnings. It expects to collect about $74 million in the 2025-26 fiscal year, more than double the $35 million it collected previously.

Rapidly growing mobile penetration leaving land-based betting behind

Commenting on the new Kenyan model, Parliament’s “The Budget Watch 2025” document said a blanket tax rate could discourage casual participants and push actors from regulated platforms to offshore ones.

An official at one of Zimbabwe’s largest land-based operators expresses a similar concern to iGB. Speaking off the record, he says the withholding tax came into effect at a time when a large number of local punters is increasingly switching to unregulated and offshore operators.

“One now needs a mobile phone, a computer and an internet connection to start betting online,” he says.

“Some workers have been disciplined by their employers for participating in online gaming and betting using their employers’ computers and internet. And this [is on] platforms not subject to local regulations, including the new tax. 

“There are some people who used to visit brick-and-mortar branches who are now not doing so as frequently. [Zimbabwe’s witholding] tax will hasten the traffic to online platforms, leaving physical betting halls empty or for the few that don’t have smartphones and mobile data, and the old, technologically less-experienced ones.”

The Postal and Regulatory Authority of Zimbabwe said in its latest quarterly report in October that the nation’s mobile penetration rose from 101.39% in the first quarter of 2025 to 102.64% in the second.  The internet penetration also jumped from 76.19% in March, to 81.83% by June.