RGA calls for Polish taxation rethink

RGA calls for Polish taxation rethink

Wednesday, September 21, 2016 Posted by Andy McCarron
New report shows why 12% turnover tax won’t work

The Polish government should rethink its approach to the taxation of online gambling, according to a new report commissioned by the Remote Gambling Association (RGA).

Poland officially adopted the new licensing regime on mid-July with a 12% turnover tax levied on sports-betting. However, a report from economic consultants Rolland Berger points out that such as tax regime will count against the stated objectives of the Polish government, including reducing the size of the unregulated market.

Clive Hawkswood, chief executive of the RGA, said the industry has previously highlighted how a 12% turnover tax was unworkable. “Until it is changed, few operators will take up licences in Poland,” he said. “This will continue to stifle competition, value and choice for consumers. It would be a great shame if Poland did not seize the opportunity created by the new Bill to move towards a more viable regulatory option.”

The report demonstrates how the current regulatory regime in Poland is very restrictive compared with other set-ups across Europe. Noting the Polish government’s objectives were broadly in line with those of other European jurisdictions – hoping to reduce grey market volumes, increase player protections and tax revenues – the report found that the “means envisaged… may be inadequate” if the government is to achieve its aims.

In particular, the report points out that more liberal regimes, such as the UK and Denmark, have achieved higher rates of “channelling” of grey market to regulated market than more illiberal regimes such as France, and with limited us of either IP or payment blocking. “These very high channelling rates (90%-plus in both cases) have been achieved because these regimes provide a sufficiently attractive environment for the player.”

The report continues: “In fact, applying alternative (more liberal) regulatory approaches can potentially contribute to overachieving the goals indicated by the Council of Ministers in a justification for the amendment.”

The Polish betting market is hugely split between regulated and grey market operators. As of August this year six out of the even licensed operators were active online, including Fortuna, Milenium, STS, Totolotek, e-Toto. But the report suggested they represented only 30% of the total regulated and unregulated market of circa PLN443m. The report goes on to predict that if the country adopted a more liberal licensing and tax regime along the lines of those employed in the UK and Denmark, total revenues could soar, up to PLN1.2bn in 2020 with only 12% of the market remaining offshore.

Hawkswood noted that the Polish parliament was just launching upon its scrutiny of the bill and suggested MPs should give consideration of the findings of the report. “A failure to address this fundamental tax issue will unfortunately serve to make the bill ineffective because operators will not seek to enter or invest in a market where they cannot be profitable and competitive,” he said.

“A suitable gross profits tax model would enable the Polish government to attract large, reputable companies into Poland and that would provide a market for the industry, excellent products and value for the consumers, and revenue for the state and regions. It would be hugely disappointing for all stakeholders if a modern and forward-thinking regulatory regime was fatally undermined by an unworkable tax regime.”

Totally Gaming says: The arguments put forward by the RGA off the back of this report make a lot of sense. The evidence from the more liberal regulatory regimes elsewhere in Europe shows how instituting lower tax rates – and crucially done on the basis of gross gaming revenue and not turnover – can help government better achieve their aims of greater player protection, a larger proportion of revenues being generated with the regulated market and, ultimately, a higher tax take.

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