Former Gambling Regulator Calls On Poland To Reform Tax

September 28, 2021
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Poland’s former finance minister has joined calls for the country to start taxing gambling companies based on revenue, instead of the current turnover model.

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Poland’s former finance minister has joined calls for the country to start taxing gambling companies based on revenue, instead of the current turnover model.

Konrad Raczkowski, the ex-Polish chancellor, has drafted a report that proposes to impose a gross gaming revenue (GGR) tax on the country’s gambling industry and submitted it to the Ministry of Finance.

The report was filed as part of a public consultation on a legislative tax package recently approved by the government and currently being debated by parliament.

“In Poland, the 12 percent revenue tax is equal to a 55 to 65 percent GGR tax. As a result, only two out of the 20 companies that hold permissions to provide bookmaking services post any profits,” said Raczkowski, who oversaw the country’s gambling industry from 2015 to 2016.

The report says that to “achieve a real decrease in the size of the shadow economy [grey market] in Poland’s bookmaking industry … it is advisable to tax bookmakers based on the operators’ gross margins ... at a level similar to the rates implemented in other European countries, instead of the current 12 percent revenue tax”.

“An optimal level of a GGR tax on gambling is 20 to 25 percent of GGR,” according to Raczkowski.

The report also argues that the current gambling tax scheme, paired with “the pressure on raising wages, inflation and the increasing costs of energy”, discourages bookmakers from opening new shops and maintaining their existing land-based operations in the Polish market.

“The unequivocal experiences of other European countries, such as Romania, Denmark and the UK, show that, once a reasonable GGR tax rate is introduced, companies that were previously active in Poland without the necessary permissions will float to the [Polish] market,” argues Raczkowski.

The report was commissioned by the Polish Business Society (PTG) and filed during a public consultation on a legislative package that the government has dubbed "the Polish Order".

“In the context of the search of funding sources for the tax solutions included in the Polish Order, the Polish Business Society draws attention to the gambling industry within which there is a major area of the shadow economy,” the PTG said in a statement.

The filed report “shows that, by introducing relatively uncomplicated solutions, it could be possible to tighten the gambling industry and increase revenues for the state budget”.

Among its other recommendations for Polish policymakers, the report also proposes to partially deregulate the country's online casino market by enabling licensed gambling companies to provide their services to local customers. Under the current gambling law, state-owned Totalizator Sportowy is the only entity allowed to operate an online casino.

Although Raczkowski is no longer part of the finance ministry’s leadership, he remains active in politics as a member of the National Development Council, a body set up by President Andrzej Duda.

Among other responsibilities, the council advises the President on legislative proposals and their potential impact. Raczkowski takes part in the work of the council’s section that deals with issues related to the economy, labour and entrepreneurship.

The latest development indicates the growing push by Polish business to replace the country’s tax rules with solutions that would increase the competitiveness of licensed bookmakers against unlicensed, foreign-based entities.

That includes the state-owned operator.

A recent report commissioned by national lottery operator Totalizator Sportowy proposed to the authorities to replace the 12 percent revenue-based tax with a 40 percent GGR tax.

Over the past few years, local gambling industry association PIGBRiB has also called on the government to introduce a 20 percent GGR tax.

The association claims that its tax policies make the country’s market unattractive to the majority of established international bookmakers.

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