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Do casinos need to pay Vat?

by , 27 December 2013
Do you own a casino? If so, read on to find out if you have any Vat obligations in terms of the Vat Act.

Betting is subject to Vat.

Vat law clearly states that 'businesses which accept bets and award prizes are treated like any other business. If their annual turnover exceeds R1 million, these businesses must be registered as Vat vendors,' says the Practical Vat Loose Leaf Service.

If you own a casino, this includes you.

This means:

Casinos are liable to pay provisional taxes and Vat.

The Loose Leaf Service explains that due to the nature of casino businesses, casinos are liable to pay provisional taxes and Vat.

The good news is, in certain circumstances you'll be able to claim input tax on prizes consisting of 'motor cars' and 'entertainment'.

As you know, normally casinos pay out winnings and prizes in the form of cash but they can also make use of:

  • Motor cars;
  • Meal and drink vouchers; and
  • Hotel accommodation and holidays.

This means, where a bet is placed and the prize one can win is a meal voucher, refreshments or accommodation; your casino can claim input tax

Most vendors can't claim input tax on motor cars, but, Vat law states that a vendor can claim input tax on a motor car where he receives bets and the prize is a motor car.

This means that if a bet or entry is accepted in a competition and the prize is a motor car, the vendor, in this case, the casino can claim input tax for the same period that the motor car is awarded as a prize.

The bottom line: The whole gambling industry is caught up in the Vat net. The bets you place include a Vat portion as do the winnings paid out. Knowing what your Vat obligations are as a casino owner will help ensure you comply.

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