Ireland Debates Possible New Profit Tax

Irish parliament is faced with a decision this week. Due to be the center of the debate is the Finance Bill and its three amendments...

...one of which is directly relating to the gambling industry. Namely the controversial turnover tax paid by bookmakers of the country, that was supposed to be doubled, could be abolished and in its place a brand new profits tax could be instated.

Dangerous Measures

In October, Ireland's Finance Minister, Paschal Donohoe, proposed a new budget that would severely affect the bookmakers of this island nation. The new budget would require turnover tax to rise from 1% to 2% and this would go in effect as early as January 1st.

If the tax stays, finance analysts and Irish Bookmakers Association (IBA) predict nothing but gloom and doom for the betting industry which would virtually perish under such a heavy fiscal burden. They estimate that around 400 betting shops will be forced to close down, which translates to cca 1,500 people losing their jobs!

The alternative proposal, courtesy of IBA, suggests a 10% tax on gross revenue for betting shops and a 20% rate for online operators. The creators of this proposal are of the opinion that this would raise the tax contribution to €25 million, while businesses will not be endangered or put in jeopardy of being declared bankrupt.

This suggestion is also supported by the Independent Member of the lower house of the Irish legislature, Michael Healy-Raw, who has put forward and amendment to the Budget.

In favor of IBA's case, most regulated jurisdictions including the one of UK, opt for gross revenue taxes and not turnover taxes.

Crucial Time That is Running Out

The Finance Bill vote, that is expected to happen next week, could have enormous ramifications and IBA representatives wish to have a meeting with Department of Finance in order to demonstrate in person the implications of their idea.

Despite their actions, IBA is not certain that a change of heart by the government officials is not likely. This is the standpoint of chair, Sharon Byrne, who is not optimistic about that, but is also of the opinion that the current turnover tax idea does not have any grounds or future whatsoever.

She said: “This tax change is bad for business, bad for the consumer and bad for horse racing, with less set to be wagered with licensed operators on races. It’s particularly bad for the little guy with small shops becoming unviable. The consumer will no longer get that local, personalised service.”

General idea by the ruling officials is that betting turnover tax is to be put to use for funding the responsible gambling programs.

Source:

“Profits tax amendment to be debated in Irish Parliament”, igamingbusiness.com, November 19, 2018.