Withholding tax leaves Zimbabwe’s low-income players reeling
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 that Zimbabwe adopt a withholding tax.
Yet, the “proliferation” of betting houses failed to channel revenue directly into the treasury because punters’ winnings remained untaxed. To formalise the industry and boost revenue collection to meet “pressing budget needs”, he introduced a 10% withholding tax on gross sports betting winnings. Ncube announced it as one of only four new taxes that day.
The government began enforcing the tax on 1 January 2025, applying it to winnings at all local betting shops and online platforms operated by land-based bookmakers.
Zimbabwe’s betting industry’s rapid growth
According to The Herald, Zimbabwe generated about $120 million in revenue in 2023, with the online sector contributing $45 million. Ncube projected the economy could collect up to $15 million annually via the punters’ tax, based on his forecast of $150 million in 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 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.
Costly compliance for operators
To comply with the new tax system, bookmakers were required to upgrade their reporting and transaction systems. Marvellous Tapera, founder and managing partner of WTS Tax Matrix, said operators had to automatically calculate and withhold the 10% levy on all winning payouts.
“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 stated.
“Although feasible, these changes were operationally demanding and particularly costly for smaller operators, requiring significant time and financial resources,” Tapera adds.
Smaller operators bear the burden
Citing an anonymous operator, The Herald reported that 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 annually on tax reporting.
Tapera observes that 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.
Lessons from South Africa’s model
“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.”
A release on 5 September by Stats SA said South Africa’s gambling sector generated $3.4 billion in GGR during the 2023-24 financial year. The National Gambling Board (NGB) later reported an increase to $4.3 billion for the financial year 2024-25.
South Africa’s government first proposed a tax on winnings in 2011, intending to start collecting it the following year. The levy targets professional or regular bettors while excluding casual punters. However, according to Deloitte, the government had not yet implemented the tax in February 2024 due to staunch opposition from the local industry.
Balancing revenue and social protection
Deloitte noted that “the current economic climate, characterised by high unemployment and cost of living, calls for a balance between revenue generation and social protection.” “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 consultancy said.
Regional comparisons and adjustments
In July, the Kenyan government 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 collected previously.
Kenya’s “The Budget Watch 2025” document stated that a blanket tax rate could discourage casual participants and push users from regulated platforms to offshore ones.
An official at one of Zimbabwe’s largest land-based operators expressed similar concerns. Speaking off the record, he said the withholding tax came into effect as many local punters were already switching to unregulated and offshore operators.
Online migration accelerates
“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,” he added.
“There are some people who used to visit brick-and-mortar branches who are now not doing so as frequently. Zimbabwe’s withholding 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.”
Betting trends reflect technology growth
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. Internet penetration also jumped from 76.19% in March to 81.83% by June.
The shift underscores how digital access continues to reshape Zimbabwe’s betting industry. However, with the flat 10% withholding tax weighing heavily on low-income players and small operators, many now question whether the measure will truly boost state coffers – or instead push bettors and businesses further into the shadows of unregulated markets.
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