Taxation policies and online casinos: why and how much should one pay?
The gamblers frequently visiting land-based and online casinos are concerned about the quantity of tax fees they have to pay out of payoffs they gain. Is it possible not to pay at all? How to avoid taxation of winnings? You may find the answers to these frequently asked questions in the following review prepared by Slotegrator.
General information regarding online casino taxation policies
Each separate country has its own laws regulating the activities peculiar to gambling through certain policies establishing applicable tax rates. Practically everywhere, one of the conditions that guarantees smooth and steady functioning of a land-based gambling house is its official registration in the regulating institutions, as well as official licensing (legalization).
The gambling business in Russian Federation is regulated by the federal law №244. The last amendments to the said law were introduced in May 2016. According to the law, the general notion of “gambling” comprises such commercial activities as casinos, betting agencies, lotteries, and betting terminals.
Meanwhile, the legislators have limited all the gambling activities to four official gambling zones, located in Kaliningrad region, Primorye, Altai and Krasnodar Territories. It is officially prohibited to install slot machines on the rest of the territories.
The official launch of the biggest gambling zone in Sochi “Krasnaya Poliana” is already scheduled for December 31, 2016. At this very point “Krasnaya Poliana” will host only one casino, powered by the company “Domain” offering around 35 gambling tables and 400 slot machines. The other territory to be turned into the next gambling zone is Crimea, however, the decisions regarding this question are postponed as long as matters of economy and social development are more crucial for the citizens of the peninsula. According to Sergey Aksenov, the head of the Republic of Crimea, all the construction and assemble operations of the Crimean gambling zone are scheduled for the following year.
Taxation in Russian Federation
The companies targeted at performing commercial activities in the area of online gambling should, first of all, register in the local tax office and pay a monthly fixed tax fee out of their incomes from the gambling equipment they use. The tax rate charged from one single gambling table fluctuates from 25 thousand up to 125 thousand RUB, from a slot machine – from 1,5 thousand RUB to 7,5 thousand, from a single bookmaker's office or a betting terminal– from 5 thousand up to 7 thousand RUB.
Every month they are supposed to file declarations and pay tax levy that is calculated as follows: the quantity of taxable activities and assets multiplied by flat rate. For instance, if there 3 slot machines installed in the casino, the fixed tax rate accounts for 5 thousand RUB. Amount due: 3х5 thousand =15 thousand RUB.
Late payment implies penalty charges that fluctuate from 20 up to 40% out of the overdue amount. It should be said, that the federal law prohibits commercial activities of the online casinos (article 5). However, one should orient on the definition of “gambling” given in the article 4. If the commercial activities do not fall within the definition of gambling, in this case taxes are charged according to generally accepted rules.
In North America, every separate state introduces its own laws regarding gambling activities. Nevada seems to be the number one state in terms of low taxes imposed on casinos, as long as the tax rate accounts for 7,75%. The second place belongs to New Jersey that charges only 9,25%.
The highest tax imposed on gambling in the USA is registered in the state of Pennsylvania, which is around 55%, while in Florida it accounts for 35%, but the legislators are still considering its reduction to 10%.
The commercial activities of online casinos are prohibited in many countries, particularly, in Russia and Ukraine. Since gambling is highly accessible online, the gamblers benefit from it and win sustainable amounts of money. The majority of online casinos are registered in offshore zones. The whole procedure is more or less affordable: it costs around $1,5–2 thousand to start a company. The legalization of the said company will cost a little bit more , depending on the chosen offshore zone, the price of an average license fluctuates from $15 thousand (Costa Rica) up to $350 thousand (Austria). Annual prolongation accounts for the same amount as the initial payment (lower in separate zones). Registration in some of the offshore zones requires obligatory payment of local taxes and implies regular income reporting.
The amount of taxes charged from winnings in different countries
The Russian legislation stipulates an average 13% tax imposed on winnings. If the said payoff was gained as a result of taking part in a special offer (for instance, “collect 5 bottle tops and win a prize”), than the tax rate increases up to 35%. In addition to the said above, the payoffs accounting for less than 4 thousand RUB are not taxed.
The gambling business in Ukraine (except lotteries) is officially prohibited, but the internal revenue code contains an article that has provisions for the cases of instant winnings, so the tax rate accounts for 15%. If the payoff sum exceeds the minimum wage, the tax rate increases to 17%. Meanwhile the initiator of the drawing is obliged to charge 30% of the winning payoff.