Gambling Point Of Consumption Tax
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- »Tasmanian POC Tax on Betting Begins Jan 2020
It was officially announced months ago. The Tasmanian Government will impose a point of consumption tax on all net wagering revenue to be paid by betting companies.
Betting Tax Amendment (Point of Consumption) Bill 2018. Type: Government: Status: Assented on Wed 31 Oct 2018 - Act No 69 of 2018 (GG No. Point of consumption tax. Proposed section 13C provides that a betting operator is liable to pay point of consumption tax on the operator’s net NSW wagering revenue for a financial year. The tax is payable at the rate of 10% of the amount by which the net NSW wagering revenue exceeds $1,000,000.
This month, the government confirmed that the 15% tax will begin on January 1, 2020.
What is a POC Tax?
POC stands for point of consumption. It is a tax that is imposed on gambling providers, sometimes online gaming operators and other times land-based gambling establishments – or both.
The tax is calculated based on the location of the customers, where the product is consumed.
The purpose of the POC tax is to keep companies from locating elsewhere for tax breaks. For example, if a company is based in Malta but caters to customers in Tasmania, the company would normally avoid paying Tasmanian taxes. But the POC tax charges a tax to that company for revenue earned from customers in Tasmania.
Updated May 14, 2018 – 5.44pm, first published at 10.14am or Subscribe to save article Victoria will raise $30 million annually from a new gambling point of consumption tax, but foreign-owned. In addition, a point of consumption tax (POC) called the remote gaming duty (RGD) of 15% has been introduced by HMRC from 1 December 2014 and is payable on all bets made by UK customers irrespective of where the online operator is located.
Many gambling businesses oppose the tax because they have to pay a POC tax and a tax in their own country. Governments imposing the tax believe it incentivizes the companies to relocate to that territory.
Speaking of Tasmania
In May 2019, Tasmania Treasurer Peter Gutwein announced that the government would be introducing a POC tax on betting companies. It was a part of the 2019-2020 state budget to be implemented in 2020.
On October 7, Gutwein confirmed it.
“Following consultation with industry stakeholders,” Gutwein wrote, “it has been determined the point of consumption tax will be set at a rate of 15% of the net wagering revenue of betting companies and will exclude the face value of free bets provided to bettors.”
Proposed section 13C provides that a betting operator is liable to pay point of consumption tax on the operator’s net NSW wagering revenue for a financial year. The tax is payable at the rate of 10% of the amount by which the net NSW wagering revenue exceeds $1,000,000.
Gutwein noted that the rate is consistent with most other jurisdictions. He added that there will be a tax-free threshold of $150,000 in betting turnover.
The additional revenue garnered from the new tax, which will begin on January 1, 2020, will bring in approximately $5 million per year. The net benefits will be “appropriately shared with the local racing industry.”
Gutwein also said that legislation will be introduced into Parliament in November this year to codify the new POC tax.
Responses Mixed
Tasracing was quick to “welcome” the tax as soon as it was announced in May.
CEO Paul Eriksson said the tax was a “positive development that would provide the state with a greater portion of national wagering revenue.”
Betfair had already been paying POC taxes in other territories and in the UK. However, it generally took issue with the tax.
It devoted a page of its Aussie website to POC taxes and wrote, “Currently, Betfair pays 51% of its wagering revenues in fees and taxes, increasing to 66% in states/territories where the POC rate is 15%. Nationally, the blended rate is 11%, representing a 21.5% increase in fees and taxes paid on top of an already high cost base and leaves little margin for operating costs, consumer protection, and capital expenditure.”
In response, Betfair changed some of its player benefits to offset the costs.
POC Taxes by Territory
Tasmania is far from the first territory to implement a POC tax. In fact, it is one of the last to do so.
- South Australia = 15% POC started July 2017
- Queensland = 15% POC started October 2018
- ACT = 15% POC started January 2019
- Western Australia = 15% POC started January 2019
- New South Wales = 10% POC started January 2019
- Victoria = 8% POC started January 2019
And Tasmania will begin its 15% POC in January 2020.
The Northern Territory is unlikely to implement the tax in the near future, having shown staunch opposition to it. The government there would only support it if implemented on a national basis.
POC Tax Origins
The point of consumption tax was first conceptualized by the UK Gambling Commission. Finding that many companies were based overseas to avoid taxes but wanted licenses to offer gambling services to people in the UK, the Commission decided to find a solution to benefit the UK government.
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The UK POC tax was first introduced in 2014 and started at 15%.
After several years, the UK Gambling Commission determined that the tax was responsible for most online gambling traffic – from poker, casino games, and sports betting sites – responding favorably. The UKGC claimed that most operators began paying their taxes, and most consumers frequented the regulated and licensed sites.
In late 2018, the UKGC announced that it wanted to raise the POC from 15% to 21%. The goal is to generate an additional £1.23 billion in the next five years.
If Australian territories are following the UK, there could be efforts in the coming years to raise the tax rate. It could be a few years, though, because of the newness of the taxes in most areas.
Victoria has passed legislation to introduce a point of consumption tax (POCT) for wagering and sports betting.
The Gambling Regulation Amendment (Wagering and Betting) Act 2018 received Royal Assent on 25 September 2018 and will come into effect on 1 January 2019.
The Victorian POCT will be payable by wagering and betting operators on the revenue derived from wagers and bets of customers located in Victoria.
There are several types of wagering and betting products that can be offered in Victoria, including pari-mutuel (totalisator), fixed odds, simulated racing (Trackside) and betting facilitated by a betting exchange or other commission-based agent.
The POCT will apply at a rate of eight per cent of the net wagering revenue derived from all wagering and betting types. For bookmaking operators, net wagering revenue is calculated as monies staked minus winnings paid.
Gambling Point Of Consumption Taxes
As a result of this change, Tabcorp, which holds the exclusive Victorian wagering and betting licence, will pay eight per cent tax on all net wagering revenue, instead of the current arrangements where different betting products are taxed at different rates.
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Online bookmakers licensed interstate will be required to pay eight per cent on net wagering revenue of Victorian-based account holders.
The POCT will apply to operators whose annual net wagering revenue exceeds a $1 million threshold. As a result, most Victorian on-course bookmakers will not be required to pay the POCT.
Uk Gambling Commission Point Of Consumption Tax
The POCT is forecast to raise $30 million a year. The government will contribute 1.5 per cent of taxable net wagering revenue to the Victorian Racing Industry (VRI). The remainder of the revenue collected will go to the Hospitals and Charities Fund.
On 1 January 2019, New South Wales will introduce a 10 per cent POCT, and Western Australia and the ACT a 15 per cent POCT.
South Australia and Queensland introduced a 15 per cent POCT on 1 July 2017 and 1 October 2018 respectively.
A statutory review of the Victorian POCT will be undertaken within 18 months of commencement by the Treasurer, in consultation with the Minister for Consumer Affairs, Liquor and Gaming Regulation, the Minister for Racing and the VRI.
Gambling Point Of Consumption Tax Exempt
Read more about the Point of Consumption Tax.
Point Of Consumption Tax Gambling Australia
Media contact:
Fiona Skivington, Manager, Media & Communication
on +61428248931 or fiona.skivington@responsiblegambling.vic.gov.au