Irish MP proposes amendment to betting tax increase
Taxation basis would be switched to gross profit model rather than turnover
An Irish independent MP has tabled an amendment to the proposed increases in Irish betting taxes that would see the tax levied on gross profits rather than turnover.
If passed, Michael Healy-Rae’s amendment would see the tax rate switched from 2% on turnover to a revised rate of 10% on gross revenues for retail operators and 20% for online operators.
The amendment is expected to deliver an estimated €25m to the Irish exchequer, which is half of the estimated €50m expected from the 2% tax rate but should preserve the 3,200 jobs reportedly at risk from the 1% rise.
This would also bring taxation methods in line with the UK model, where online operators are currently taxed at 15% of gross revenues, with gaming duty to increase to 21% from October 2019 and betting duty staying at 15%.
The news comes less than a week after Ladbrokes announced the closure of its on-course bookmaking pitches and the termination of all existing Irish racing sponsorships.
In an interview with the Irish independent, Sharon Byrne, chair of the Irish bookmakers’ association, voiced her support for the measures, claiming that a gross profit tax model would be more beneficial to the industry.
Byrne said: “A 10%/20% gross profit tax model is fully costed, is progressive, has full industry support, is politically supported, is legally sound and will return over €25m additional revenue to the exchequer and will save 3,264 jobs at the same time.”
Centre-right party Fianna Fail has also tabled an amendment to the Finance bill, requesting an economic analysis to determine the impact on the independent betting sector within six months of the measure coming into force in January 2019.
However, Alan Heuston, partner and head of the Betting & Gaming Group at Irish law firm McCann Fitzgerald believes there is a flaw in the proposals, namely the different taxation rates being applied to retail and online operators.
For Heuston: “Any proposal of this nature would need to be considered carefully from a European Law perspective as it could be regarded as being anti-competitive or discriminatory and is therefore likely to be met with opposition from on line operators.”
Heuston said it was unlikely that the Irish tax office would have sufficient time to consider the wider EU implications of the IBA proposal in time for it to be implemented and that a single taxation rate for both retail and online operators had a greater chance of being implemented.