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Online gambling body AFJEL joins calls for tax reform

Wednesday September 7, 2011 :   Online gambling body AFJEL joins calls for tax reform
Pressure is mounting for a revision of the tough French taxation regime applied to online gambling, with the relatively new action group AFJEL joining calls for a more realistic approach.
High tax is one of the main objections voiced by operators considering an application for a French licence. The 8.5 percent tax on turnover (ie all betting stakes) instead of on GGR makes it difficult for operators to turn a decent profit.
Several major internet gambling companies have already showed their disapproval of the high taxes imposed by the French government, with Ladbrokes, William Hill, Sportingbet, and Betfair among those that have eschewed operating in the French online gambling environment.
The national regulator, ARJEL, has made a submission to government which reportedly contains 65 proposals for improvement, among these a suggestion that taxation be based on Gross Gaming Revenue (GGR)* and be set at different rates by genre e.g. 25 percent for poker, 38 percent and 55 percent for sports betting and horse betting.
ARJEL is understood to have punted a return-to-player rate of 95 percent, an increase of 10 percent over the current requirement, in an attempt to improve the appeal of French games.
These proposals are in contrast to a flat 20 percent across all online gaming suggested by Deputy Jean-François Lamour of the Union pour un Mouvement Populaire (UMP), a centre-right political party, earlier this year. Lamour recommended a RTP rate no lower than 90 percent.
Industry observers see the proposals as an indication that the counterproductive effect of too onerous a tax regime targeting turnover has been taken on board by all concerned, and there is hope that the review on the industry scheduled for November will herald a more practical approach.
To some extent this appears to be supported by the ARJEL chief, Jean-François Vilotte, who has reportedly said that 'some' modifications might be achievable this year.
However, the Minister for Budget, François Baroin, has dampened optimistic predictions by asserting that the government will not be introducing tax reforms before the 2012 presidential elections, and that there are no immediate changes on the government agenda.
*GGR = amount wagered minus the winnings returned to players.

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