South Australia mulls PoC tax switch
State government says taxing online gambling operators on a point of consumption basis is an option under consideration
The South Australian government is contemplating a move to taxing online gambling on a point of consumption (PoC) basis as part of a wider review of the state’s taxation system.
A State Tax Review Discussion Paper released by the Government of South Australia said a switch from taxing on a place of supply to a place of consumption basis was one reform option currently being considered by the authorities.
The paper said the switch had the potential to provide a neutral tax system between online and land-based operators, enable the Government to better prevent problem gambling and help improve efficiency.
However, Jamie Nettleton, partner at Sydney-based law firm Addisons Lawyers told eGaming Review this morning that the introduction of a point of consumption tax may lead to unintended negative consequences.
If South Australia were to introduce a PoC tax, it is likely to have the opposite effect to that intended as Australian interstate regulated sites may cease, or reduce, the extent to which they provide services to SA residents” he said.
“This would leave it open to offshore operators to provide similar services free of any tax payments without complying with the specific South Australian harm minimisation requirements that currently apply,” Nettleton added.
A switch to a PoC tax would mean the likes of Luxbet, which is based, licensed and taxed in the Northern Territory, would pay an additional tax on bets placed by customers residing in South Australia and could potentially lead to a double taxation issue should other states not adopt a similar system.
The report noted a double taxation issue could arise but also added that any changes to online gambling taxation was likely be a long-term initiative and was still at the early discussion phase.
“The only tax that could be considered for reform in the short to medium-term as part of this review is gaming machine tax for clubs and hotels,” the report said.
Figures show that the Government is expecting to accumulate AUS$394m in gambling taxes in 2014-15 from a number of gambling services including hotels and clubs with gaming machines.
The Discussion Paper highlighted the government was prompted to assess the State’s gambling taxation regime due to increased competition from online operators which it said could impact the profits of current regulated operators.
The Government of South Australia has invited interested parties to respond to the Discussion Paper by 10 April.