Polish tax rate will keep operators out
Operators say the Polish levy remains the main barrier to entry despite government attempts to reduce the regulatory burden
Operators have responded negatively to the Polish government’s plans to attract more foreign egaming firms to apply for licences claiming the proposed changes do not go far enough with the tax rate still too high.
Yesterday, eGaming Review reported that Poland was planning to open its doors to foreign-based firms by removing the requirement that remote operators must first establish a company within its borders.
However, a number of operators have told eGR that while the regulatory reduction is welcome, it is the country’s uncompetitive tax framework which proves to be the biggest deterrent for operators.
Depending on the type of bet, the tax rate varies between 2.5% and 12% of revenues. However, the lower end of the scale only relates to horse racing which makes up a small fraction of Polish revenues, while the majority of other bet types are hit by the maximum 12% charge.
“The only change the amendment gives is the option with company registration,” one source told eGR. “But it wasn’t really a stopper for any company as the cost of setting up a company in Poland is not massive,” he said.
“If we wanted to operate on 12% tax we would have done so two or three years ago as the proposed amendments probably only result in a modest saving per annum,” he added.
So far, only four operators have gained a Polish licence; Intralot subsidiary Totolotek, Fortuna, Milenium, and STS, with recent estimates putting the regulated share of the Polish market at just 9%.
As such, the market is dominated by grey market operators and STS CEO Matthew Juroszek he didn’t expect the new reforms to alter that fact.
“We’re disappointed to note that there are no plans for tax changes, which are currently highest in Europe. There’s also nothing about IP blocking for unlicensed operators so it won’t affect the grey zone at all,” Juroszek said in a statement.
A report conducted by consulting firm Roland Berger in February estimated the Polish market to be worth around 1bn per year, however, with more than 90% channelled through unlicensed operators the country is thought to be losing out on around 145m in tax receipts.
However the Government has estimated that the recently proposed amendment to its Gambling Act would claw back around 5.75m of that total.