As a rule, when it comes to the taxation system in the gambling industry, this is mostly regarded as operators’ responsibility. However, there is an exception – tax on winnings. In which countries this rule is applicable to the users of virtual casinos and in what sizes – keep on reading the article by Login Casino to find out.
Probably everyone heard about enormous taxes on winnings for the American lottery. A similar situation is with the state’s levy in case of winning in land-based gambling establishments. However, with online casinos not everything is so obvious.
It should be noted that in many jurisdictions online casino operation is prohibited at all. Therefore, it is useless to speak about any type of taxation in this case. Besides, if to look at taxes in the online segment in general, it should be noted that one of them is the tax on online betting companies’ operations. For instance, in Russia a law has been adopted regarding the amount of winning – if a gambler wins more than 15,000 RUB, they should pay a tax on it. Besides, the bookmaker here is also a tax agent that deducts a certain percentage while the player receives the winning, which is already without the tax amount.
Tax on gambling winnings: definition
Tax on winning is a type of taxation applied to the money a person receives from participating in gambling activities – lottery, casino and bookmaking operations. In the land-based segment different levies are imposed on residents of the country and tourists. Certainly, countries that rejected this type of taxation, look more attractive for travelers.
Jurisdictions using this type of taxation have the following explanation: gambling winning is regarded as an additional source of income. Therefore, the answer to the question “Are gambling losses tax deductible?” is “No”.
Tax on winning is the CIS countries
Representatives of the Latvian land-based gambling industry are convinced that tourist flow decrease as well as the decline in casino’s popularity, is caused by the fact that people go to neighboring countries where there’s no gambling tax.
This type of levy in Russia has already been mentioned above. From all the CIS countries, the most interesting example is Belarus. This is mainly due to the fact that in contrast to Ukraine, in this country online gambling has already been legalized. Besides, tax levels are established for the number of pieces of gambling equipment. The funds' transfer is the responsibility of legal entities.
Despite the strict British gambling laws, there is no tax on online casino winnings in the country. Operators are obliged to pay a 15% tax on their GGR.
The main special feature of the American market is that each state has the right to determine its own policy in terms of the gambling industry. Despite the fact that in most of them the organization of online casino operation is illegal, the more and more widespread phenomenon is sports betting legalization. In some states online bookmaking activities and even mobile applications for betting are allowed. The strictest rules are in Pennsylvania. For residents of the state, the gambling winning tax is formed in the following way – 30% of their money prize.
Users can become taxpayers even without their consent. This might happen in case of excessive levy imposed on operators. As a result, the latter starts gradually increasing the cost of its services.
In Australia, international online gambling operation is prohibited. Therefore, only licensed representatives have the right to organize online casino activities. They pay a levy of 15% of their GGR. Meanwhile, users are free from any taxation.
Online casino activity is legalized in Mexico and Argentina. Operators receive licenses from local gambling regulators. Mexican operators are obliged to give a 30% tax to the state budget. Besides, there is a levy on winning, which is paid by both an operator and a player. Gambling companies are to pay 12% while the lucky winner has to give to the state only 6%.
The income tax in Argentina is 41,5%. Meanwhile, if the user managed to win the money prize exceeding 48 EUR, he is obliged to pay a 31% gambling tax rate to the state budget.
Not only organization of online casino operations but also participating in them is illegal in the South African Republic. The only allowed online operators are betting companies.
The corporate income tax in the country is 29%. Players that managed to achieve success in their online betting operations are to share their income with the state – 15% of the money prize.
As mentioned earlier, the gambling regulator of Panama expressed its intention to cancel the tax on gambling activities.
Read more: Responsible Gambling: Tips for Players