Bulgaria approves threefold reduction in online gambling tax

bulgaria-online-gambling-tax-cutBulgaria’s parliament has voted to amend the country’s Gambling Act to decrease its onerous online gambling tax rate to a level that might actually encourage operators to apply for state-issued licenses. The country had instituted a 15% tax on online betting turnover that operators complained made profitability an impossible dream. In November, a group of 11 parliamentarians proposed an alternative scheme based on a 20% tax on gross profits – effectively a threefold reduction from the previous scheme – in the hope that it would coax these reluctant operators to come in from the cold. The amendment was supposed to come up for a vote last week but was postponed after opposition politicians expressed lingering concerns.

On Wednesday, 110 members of parliament voted in favor of this latest proposal, while 79 MPs cast ‘nay’ votes and two MPs abstained. Operators who apply for Bulgarian licenses will now pay a one-time fee of BGN 100k (€51k) while the gross profits tax will be payable on a monthly basis. The same fees will apply equally to domestic and international operators, as well as to both online and land-based businesses, including bookmakers, lottery operations and poker rooms.

Parliamentary budget committee chairman Yordan Tsonev said gambling’s contribution to next year’s tax coffers would be BGN 22m (€11.2m) less as a result of the changes. However, that’s based on the current roster of licensed online gambling operators remaining at one – Malta-based efbet.com – and Tsonev expects Wednesday’s happy news will result in renewed interest in the online gambling license office (and a corresponding reduction in the names on the country’s online gambling blacklist). Given that the licensing process takes at least six months, Tsonev estimated that by 2015, the extra revenue from licensed online operators could top BGN 50m (€25.5m), rising to BGN 100m by 2016.