Bookmakers to be taxed for online Irish operations
Online operators to pay same 1% turnover tax as retail operators " companies have to pay for a licence.
The Irish government will impose a tax on online operators for the first time in a bid to boost revenues for the country’s horse racing industry which is currently subsidised by taxpayers.
Agriculture minister Simon Coveney will aim to push through legislation this year that would see online operators taxed at 1% on all transactions “ the same rate as retail bookmakers “ as well as being required to pay for a licence to operate in the Republic, Irish newspaper the Sunday Independent reported. In February Coveney announced that new legislation was likely to be published before the summer, later than originally planned.
The measures are being introduced to cut the horse racing industry’s dependence on taxpayers’ money with the sector currently receiving £56m a year from the state. The horse racing and breeding industry is estimated to be worth around 1bn to the Irish economy and employs around 20,000 people.
The change comes as revenues from high street bookmakers continue to fall, with turnover totalling 2.7bn in 2011, down from 3.66bn in 2008, while online and telephone turnover rose from 700m to 900m in the same period. The Independent added that retail bookmakers are reportedly unhappy with the current 1% turnover tax, and are pushing for a full-scale overhaul of the system, claiming that falling revenues mean the current rate of tax is not viable.
In January this year Ladbrokes Ireland chief executive Joe Lewins warned that up to 600 jobs were at risk due to falling revenues in the sector calling for urgent reform. Lewin’s claims followed the sale of William Hill’s retail estate to Boylesports in November last year, thought to have saved around 65 jobs. Paddy Power has also seen a decline in operating profit from its Irish shops down from 17.6m in 2010 to 10.9m last year. As a result betting duties paid to the state have fallen from 70m in 2001 to under 30m.
Paddy Power told the Independent that the tax would only be successful if regulation was properly enforced: “It is essential that it is a level playing field. It will need to be robustly policed to ensure everyone pays the same. We have no problem paying tax on our online earnings, we realise the situation the country finds itself in.”