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KPMG Report urges adoption of Gross Profit Tax for sports betting in Italy

A KMPG study, commissioned by The Remote Gambling Association (RGA), the largest trade association for remote gambling operators in the world, has concluded that a taxation regime for sports betting based on a Gross Profits Tax (GPT) will result in more i

Monday 30th July 2012

A KMPG study, commissioned by The Remote Gambling Association (RGA), the largest trade association for remote gambling operators in the world, has concluded that a taxation regime for sports betting based on a Gross Profits Tax (GPT) will result in more income for the Italian government and better social protection measures for Italian consumers. The RGA commissioned KPMG to test the impact of a gross profit tax on revenues for the Italian government. The report found that the current tax on stakes (the so called turnover tax) led to substantially worse value for consumers and that this largely explained why an increasing number of Italian sports bettors were choosing to gamble with operators who are based in jurisdictions outside of Italy. According to the KPMG report: “We expect the increase in price which accompanies a turnover tax to have two effects on Italian remote gambling on sports:  to reduce the demand for gambling overall; and  to incentivise Italian nationals gambling online to switch their gambling activity from onshore duty-paid providers to lower priced duty avoiding offshore providers.” Today the Italian gambling regulator, AAMS, estimates that the size of the offshore duty avoiding market for sports betting at c.€1 billion in 2011. KPMG calculated that a gross profits tax on sports betting of between 15 and 16 per cent would raise the same tax revenues as the current turnover tax rates. If customers get better odds as a result of a switch from turnover to gross profits taxes, the operators can expect to recapture sales from lower priced duty avoiding offshore providers. The report notes that “a move towards a gross profit tax for Italian sports betting would also accord with the current trend around Europe with what Italy levies on other gambling products”. Clive Hawkswood, CEO of the Remote Gambling Association said: “The RGA believes that a turnover tax for online sports betting creates a huge and uncompetitive financial burden for consumers and licensees. In contrast, an affordable rate of GPT will see more Italians bet with operators who are licensed in Italy. As the KPMG report clearly demonstrates, this is achievable in a way that will safeguard existing tax revenues and enable Italy to benefit from the future growth in the market. Against that background we will be asking the Italian Government to change its current tax basis for sports betting from turnover to gross profits.”




Source: OnlineCasinoNews

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