For years, Australian lawmakers have been troubled over how to handle offshore operators who offer their business to local players, as they profit from Australians but don’t pay tax in the country. Now, an effective solution has been presented in the form of a point-of-consumption tax.
The South Australian government has recently launched a new law that will require offshore operators to pay 15% on profits generated by players within the state. This is the first time that any Australian jurisdiction will target gambling operators based on where they make their money rather than where they are based.
The new law will take effect on July 1, 2017 – at which point all operators who earn over $150 000 per year will be required to pay the point-of-consumption tax. The revenue generated by the tax will apply to any bets made on horseracing, AFL football, greyhound racing and more. It is estimated that the new point-of-consumption tax will bring in $9.2 million for the local government.
“If betting companies are making profits from South Australian punters they should be paying tax in South Australia, not in whichever jurisdiction their head office and servers happen to be located,” says Tom Koutsantonis, Treasurer for South Australia.
While gambling operators may begrudge having to pay another tax, this is really the best option for all parties. It allows the Australian government to earn tax revenue from offshore operators and levels out the playing field for all offshore and local gambling companies.
There is no word yet on whether other states will introduce a similar tax. However, we expect that there will be a ripple effect as a result of South Australia’s new online gambling tax scheme. We will keep you updated in case other states follow suit with their own online gambling taxes.