Betting tax on online operators may make them move offshore

 

PROPOSALS TO apply betting tax to online operators could force bookmakers to move offshore and cost jobs if they are not applied across the board, according to a number of commercial lawyers.

Minister for Finance Brian Lenihan announced in the Budget that the Government intended extending the existing 1 per cent levy on betting turnover in bookie shops to online operators who were not currently subject to the charge.

Mr Lenihan said the Finance Bill would contain full details of the proposal, and added that he hoped the measure would raise around €20 million extra in a full year.

Joe Kelly and Paul Fahy, partners at Dublin solicitors firm AL Goodbody, warned at the weekend that the proposal as it stood could force Irish-based companies to move their online businesses offshore if it was not applied across the board as they could be left at a competitive disadvantage.

Mr Kelly pointed out that it was not clear from the Minister’s speech if the Government intended applying the tax just to those businesses which have a physical presence in the Republic or if it intended applying it to those that offered online betting here but were based in other jurisdictions.

The companies rather than customers pay the tax, and according to Mr Fahy and Mr Kelly this would create problems if the Government wanted to apply it to businesses based outside the Republic but which were accepting bets online from clients based here.

Mr Lenihan indicated that he was considering a licensing system for such operators.

However, the lawyers say that similar systems have been tried in France and Italy with only limited success.

Irish-owned bookmakers such as Paddy Power and Boylesports, whose online operations are based here, have warned that taxing this part of their businesses without applying it to competitors based abroad would leave them at a competitive disadvantage and possibly force them to move their online divisions offshore.

Mr Lenihan also said in his Budget speech that the Government wanted to develop a tax and licensing system that would make the Republic an attractive location to on-line betting and gaming companies that have expressed an interest in investing here or which have already done so.

Mr Kelly said his firm was aware of a number of multinationals that were interested in basing part of their operations here.

He added that if the Government licensing and tax proposals strike the right balance it would encourage investment and job creation.