Ireland to Adopt New Online Gambling Tax System

May 13th, 2012 by Michael Mills

Ireland has indicated that it will pass a new legislation during the next couple of months that will impose a new taxation regime of online gambling brands operating in the country. The new tax will benefit both the state and the operators.

In order to acquire more tax revenue, the Irish government intends to adopt a new legislation that will impose a tax rate of 1% on turnover on online gambling companies that provide sports betting services to Irish players.

The Government estimates that if 77% of the companies that provide services in Ireland agree to pay the tax then the state will be able to generate around 50 million Euros of tax revenues within a year.

Some of the biggest companies that will for sure seek licensing and agree paying the imposed tax will be renowned names such as William Hill, Ladbrokes, Paddy Power and others. These companies are already well-established in Ireland and will not risk to be blacklisted for not paying taxes.

The 1% tax on turnover is only valid for ventures offering direct betting services. Betting exchanges such as Betfair will have to pay a special 15% tax on profits. Both the tax on profits and turnover tax was well-received by operators.

A recent study commissioned by Betfair points out that the proposed tax rate of 1% on turnover and 15% of gross profits is the most optimal solution for both the state and the operators. The study pointed out that if the tax rate would be increased even with 1%, the state would generate less tax revenues.

Ladbrokes, while supporting the current proposal, has indicated that in its view a default tax rate of 7.5% on gross profits might have been a better solution. Betfair, on the other hand, support the current proposal.

This new tax system would make Ireland one of the countries with the lowest online gambling taxes in Europe. A low online gambling tax usually means that more companies will be willing to seek licensing which would enhance player security and generate more tax revenues for the state.

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