According to the Inland Revenue Department, betting duty is “a tax levied on betting conductors on the proceeds of Mark Six lotteries and on the net stake receipts from authorised betting on horse racing and football matches, and on contributions to or participation in authorised cash lotteries. Are these gambling activities taxable in Hong Kong? This article introduces the Betting Duty.
Introduction to “Betting Duty”: Do I have to pay tax on Mark Six winnings?
The Betting Duty Ordinance is an important tax legislation in Hong Kong, providing for the approval of cash lotteries, lotteries, betting on horse races and football matches, and for the imposition of tax on their activities.
However, as the only legal lottery in Hong Kong, Mark Six is one of the legal forms of gambling approved by the Hong Kong Government, but betting on Mark Six is illegal in Mainland China.
Therefore, according to the Inland Revenue Ordinance, the proceeds from Mark Six and other approved betting on horse racing and football matches will be taxed, except that the Inland Revenue Department (IRD) will target the betting conductors, not the participants or even the winners of Mark Six.
It should be noted that the Inland Revenue Department does not levy betting duty on the winners of ordinary lotteries, nor does it issue betting duty receipts to the winners. Members of the public who are notified that they have won a lottery and are required to pay betting duty on their winnings should be vigilant and prevent themselves from being cheated.
What are the circumstances under which betting duty is levied?
According to the Inland Revenue Department, the Betting Duty Ordinance covers the following activities conducted in Hong Kong.
A tax on the net stake receipts of an authorised company from the conduct of horse race betting.
contributions or participation payments received by an authorised cash lottery activity
taxation of proceeds from the conduct of lotteries by an approved company; and
net stake receipts from betting on football matches by an approved company.
What is the rate of “betting duty”?
Tax rate Horse race betting Cash lottery activities Lottery activities (Mark Six) Football betting
Local betting on local matches % of payments, contributions or participation 30% of lottery proceeds 25% of net stake receipts
(a) Initial $11,000,000,000 net stake receipts 72.5
(b) Net stake receipts of the next $1,000,000,000 73
(c) Next $1,000,000,000 net stake receipts 73.5
(d) Next $1,000,000,000 net stake receipts 74
(e) Next $1,000,000,000 net stake receipts 74.5
(f) Balance 75
Local Bets on Outbound Matches % Tax Rate
(a) Net stake receipts 72.5*
*The betting duty rate applicable to offshore horse racing has been implemented since 1 September 2013.
The above information is provided for reference only. If you have any queries regarding taxation or accounting, it is always advisable to seek advice from a professional accountant and we welcome your enquiries.