Czech Republic Plans to Double the Taxes on Gambling

Czech Republic Plans to Double The Taxes on Gambling

The Czech Finance Minister Andrej Babis believes that the gambling industry could give a greater contribution to the country’s economy.

According to Reuters, on Friday, Dec. 19, Babis will propose a significant increase of the gambling taxes applied in the Czech Republic that could double the levies currently applied.

Today, the companies that legally offer gambling and betting services in the Czech Republic are subject to a 20-percent tax on their Gross Gaming Revenue (GGR) and a 19-percent corporate tax.

According to Czech Hospodářské noviny, the plan that Babis is supposed to make public on Friday will propose to increase the tax on the GGR up to 30-40 percent, with different rates for different games. A 30-percent tax would, in fact, be applied to lottery games and a 40-percent one (if not higher) to live slots.

To date, it is not clear yet what kind of taxation the government is planning for both live and online poker games.

The Finance Minister believes that higher taxes could help the government to find extra revenues for six billion Czech Crowns, approximately €270 million.

The tax hike is supposed to be included in the upcoming Czech Lottery law, an ambitious text that the current government plan to use to roll out a complete overhaul of the country’s gambling industry.

The law, which is expected to enter into force in 2016, is supposed to open the Czech online gambling market to international operators through the adoption of a system similar to the one that Ireland is planning to launch during the first months of 2015.

Talking at a conference held in Prague on Oct. 9, 2014, Babi discussed his plans for a reform of the rules that regulate the national gambling industry and explained, "The current legislation does not conform with those in developed European countries, gambling is out of control and the state loses billions every year."

According to the Czech Finance Minister, "the proposed aim of the amendments is primarily to ensure high protection of citizens from pathological gambling, limit the number of casinos, improve state supervision and ensure proper taxation of all forms of gambling."

If successful, the reform would make the government he is a part of, "the first one after the Velvet Revolution, who found the courage to prepare modern gambling regulations."

In favor of a reform, is also the Czech deputy finance minister Ondřej Závodský, who believes that the current set of rules are costing missed revenues for ten of millions to the country.

According to Závodský, a study by the Czech Supreme Audit Office shows that approximately 600 million Czech Crowns (€21.8 million) go to offshore and gray-area operators every year.

If approved by the Parliament, the new Czech Lottery act is set to introduce changes also in live gambling, as it will establish a central database of players to fight compulsive gambling, ban the advertising from unlicensed operators and allow gaming rooms to be opened only in cities with more than 5,000 inhabitants, and casinos in cities with more than 40,000 inhabitants.

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