Spain Sports Betting Taxation Proposal Challenged

One by one, countries in Europe are accepting that they will have to legalize and regulate online sports betting. Spain is one of the countries that had prepared a proposal for this late last year. It hopes to obtain European Commission approval and also Spanish parliament approval before the end of 2011. However, the draft is being opposed vehemently by online betting sites and their associations. The bone of contention is the proposal to tax online betting sites on their turnover instead of their profits.

The latest organization to register its protest is the Remote Gambling Association (RGA), which has released a strongly worded press advisory this week. Though RGA has welcomed Spain’s effort to legalize online betting, it has urged the Spanish Government to change its tax proposal to one based on gross profits instead of turnover. The tax on turnover would make the Spanish market unviable and keep online betting sites away.

Clive Hawkswood, Chief Executive of the RGA, pointed out that the French experience has shown how disastrous the policy of taxing turnover can be. Hawkswood said, “We advised the French authorities that their fiscal framework was not workable, but this warning was not heeded with the result that few operators have taken up licences, which has stifled competition, value and choice for consumers.” The RGA advisory also highlighted that the proposal taxed online casino and online poker on gross profits and discriminated against online sports betting.

In order to drive home its point the RGA had hired KPMG (Madrid) to analyze the impact on the Spanish betting market of turnover and gross profits taxation systems. The findings of KPMG clearly stated that a gross profits tax would provide for greater investment and competition between betting sites, improve innovation, choice and value for consumers, optimize the size of the Spanish market and above all enhance tax revenues for the government.

The RGA is one of the largest online betting trade associations in the world. It members include the largest licensed and listed UK betting sites and European betting sites. The organization represents the online betting industry in matters of legislation and regulation. Other trade associations like EGBA and Spain’s AEDAPI have also opposed this taxation proposal.

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