Posted 1/11/11 : Online gambling's free ride is over
 
The threat to include online gambling companies – referred to as ‘remote' gambling entities – in the Irish tax net materialised as the week ended, with the cash-strapped Irish government publishing its proposals.
 
The provisions are part of the Finance Bill and embrace defined categories of ‘remote betting intermediaries' (betting exchanges like Betfair) and ‘remote bookmakers' in Ireland such as Paddy Power and Boyle Sports.
 
Betting exchanges, which allow people to make bets with other customers online, are to be made liable to a "betting intermediary duty" at the rate of 15 percent of the commission they receive from punters in Ireland.
 
The Finance Minister plans to raise an additional Euro 20 million in yearly tax revenues by extending the existing 1 percent levy on betting turnover in bookmakers to online operators. The regulatory changes outlined in the Finance Bill are to be provided for through separate legalization amending the Betting Act 1931.
 
Irish internet bookmakers have warned that unreasonable levels of taxation could make them competitively vulnerable in a tough business environment where they face offshore competitors based in low-tax offshore jurisdictions, and that this could result in the relocation of Irish companies and subsequently losses of Irish jobs and income.
 
The bill makes provision for both annual excise duty of Euro 5 000 and punitive measures to the same value, along with renewal rates based on a sliding scale tied to the operator's annual turnover. The scale starts at turnover under Euro 50 million, which attracts annual duty of Euro 5 000, rising in incremental steps to Euro 100 000 on turnover in excess of Euro 500 million.
 
The development suggests that a regulatory and licensing system for ‘remote' gambling companies is in prospect.
 
Page 186 at http://www.finance.gov.ie/documents/publications/Financebill2011/finbill2011.pdf has all the details.