GPT Tax Favours European Operators

Various European governments are presently scrutinising their internet gambling policies. One of the key issues is how to effectively tax operators. Taxation is regarded as a vital yet debatable topic at times. As it stands most governments presently employ two distinct tax rates such as gross profits tax (GPT) or turnover tax.

What is a turn over tax? Every bet that is placed is taxed so to speak. Then we have a GPT tax rate, it’s a tax levied on stakes minus winnings for conventional bookmakers, or in the case of betting exchanges commission charged to players.

In the past a turnover structure has been used to tax land-based casinos. This method of taxation is favoured by governments since it’s easy to employ and governments are now contemplating to use this same tax model to tax internet casinos. Betfair and other internet casinos are not in favour of this taxation model, since its turnover tax decreases a government’s tax margin generated by internet gambling and it also impacts negatively on players.

On the other hand we have the GPT model favoured by licensed internet casinos; it enables them to offer players a very lucrative service and competitive packages. However, by imposing a turnover tax it becomes financially unviable for casinos to offer its customers the service they deserve.

Today’s contemporary player looks for value if they can’t find it in, they’ll take their business somewhere else. In reality it causes governments to lose out in much needed tax revenues as well as the ability to control where its citizens are placing their bets. The net result is citizens’ end up supporting rogue internet casinos due to a government’s inability to properly regulate and tax internet gambling sites.

Let’s take Norway for example, with its excessive tax rate has not stopped consumers from wagering at internet casinos in other jurisdictions that offer them better service. A survey conducted recently indicated that 35% of Norwegians who wager online said restrictive measures made it more complicated for them to wager as they did previously.

France is another bone of contention when it comes to it its taxation policies. The French government’s adoption of the turnover tax system together with the cap on returns to players, made it extremely difficult for internet casinos to offer competitive products. Because of this taxation scheme only 36 operators are brave enough to operate in France. Jean-Francois Vilotte, President of French regulator ARJEL recently admitted at a Senate Committee meeting that the licensed French sports betting market is performing poorly and the French government needs to rethink its fiscal policies when it comes to internet gambling. A number of European governments are thinking of implementing GPT to tax internet gambling.

The Danish government said it would tax internet casinos based on their gross profits, Greece will also follow the same route. Spain and Ireland will use GPT as a tax model to tax internet casinos and Italy taxes internet casinos and poker sites using GPT’s framework.

To conclude, it’s imperative that governments realise that by adopting the GPT taxation model it will benefit all parties involved, i.e. the government, internet casinos and its players. To deviate from this taxation model will have dire ramifications for the egaming industry in Europe in the long run.