Issue
This ruling provides direction relating to the way casinos must account for VAT in respect of table games of chance.
Delano Abdoll
Legal Manager: Cross-Border Taxation
Facts
The nature of betting transactions in the casino industry, especially the table games of chance (for example, Roulette and Poker), makes it difficult to separate bets placed by customers and winnings paid to punters. It follows that casinos experience practical difficulties in reflecting output tax under section 8(13) of the VAT Act 89 of 1991, separately from input tax deducted under section 16(3)(d).
The gaming transactions operate as follows for table games of chance:
In practice, the table win or loss is calculated as follows:
Based on the way table games of chance are operated as described above, it is impossible to separate bets placed by customers and winnings paid to punters by casinos.
Ruling
This ruling constitutes a BGR issued under section 89 of the Tax Administration Act 28 of 2011 insofar as it relates to a casinos account for VAT on their VAT returns in respect of table games of chance on ‘gross gaming revenue’ for the relevant tax period, subject to the items listed in (a) to (c):
(a) Gross gaming revenue in respect of table games of chance must be included in field 1 of the VAT return, with the tax fraction applied to that amount reflected in field 4.
(b) Casinos are not entitled to any deductions under section 16(3)(d) if such amount has been included in calculating the gross gaming revenue.
(c) Casinos are required to maintain adequate records to enable the Commissioner to verify the validity and accuracy of the tax liability calculated and included in the VAT return as set out above, particularly the records for the purpose of audits conducted by the provincial Gaming Boards.
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