As Rwanda strengthens its tax regime on gambling to address both economic and social concerns, one exception determined a newly passed income tax bill has sparked debate: national lottery operators will not be subject to a gambling tariff. This decision has raised questions among lawmakers, with some arguing that the line between gambling (risking money on the result of something hoping to win something of greater value) and lottery is too thin to justify the disparity in tax treatment. Among other proposed changes to the 2022 income tax law, the bill raises the tax on gross gambling revenue from 13 per cent to 40 per cent. According to the government, the goal is to promote responsible gambling and generate more tax revenue from the fast-growing sector. ALSO READ: Why tax on gambling was hiked by 27% The bill provides that companies engaged in gambling activities are subject to a tax of 40 per cent calculated based on the difference between the total amount wagered and the winnings awarded – gross gambling revenue. It adds that a taxpayer declares tax on gambling activities in accordance with the form and procedure prescribed by the tax administration, and pays the tax due within 15 days following the end of each month. As the Chamber of Deputies passed the new income tax bill on Tuesday, April 29, MP Odette Uwamariya, Chairperson of the Parliamentary Committee on State Budget and Patrimony, said that one of the most substantially amended provisions was an article which deals with the taxation of income for companies engaged in gambling. This provision is an amendment to Article 50 of the law enacted in October 2022, that governs income tax. Under the new amendment, companies running the national lottery are exempted from the gross gambling revenue tax. Explaining the rationale, Uwamariya said that while lottery and gambling may appear similar, the national lottery is considered a government business. She pointed out that half of the revenues made by entities engaged in it go to the national treasury, with expectations to raise this share to 60 per cent. The companies argued that imposing addition charges on it would amount to double taxation, she explained. ALSO READ: What you need to know about Rwanda’s new tax reforms MP Théogène Munyangeyo expressed concern about societal impacts of gambling and questioned whether there is a meaningful distinction between lottery and betting. Even those engaged in the lottery, we consider that as betting. [But] because the government has a stake in it, they have been exempted, he said. Munyangeyo argued that rewards from the lottery, even when awarded in-kind—like a motorcycle worth Rwf2 million—can still fuel addiction, just like cash winnings do. “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. The 2011 law governing gaming activities defines a national lottery as a lottery scheme owned in whole or in part by the government and promoted countrywide as authorised by the same law — while a lottery scheme is any programme related to gaming established by a competent organ. The law provides that companies operating a national lottery must obtain a license and have specific agreements with the government, including terms on revenue sharing and tax contributions. “National lottery is distinct in that it is organised under government control and contributes a defined portion of its revenue directly to the treasury,” Uwamariya said. Meanwhile, Uwamariya reported that while the gambling sector has generated Rwf260 billion since 2013, the government collected only Rwf8 billion in taxes. This disparity, she said, justifies the need for higher tax rates to curb abuse and address gambling-related social issues such as trauma and addiction. Godfrey Kabera, the Minister of State in charge of National Treasury at the Ministry of Finance and Economic Planning, said that the goal of the tax changes is to grow the gambling sector without endangering public welfare. “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,” he said. Responding to Munyangeyo's question on whether private shareholders in a lottery operation should be taxed, Kabera said that because gross revenue is taxed (before distribution to the treasury), applying the same tax would unfairly place a burden on private investors after the government has taken its share. “It would be as though they are carrying the tax burden alone, yet we are in the investment together,” Kabera said.
