Gambling
Companies Could Leave Costa Rica if Taxed
By Christopher Costigan, Gambling911.com
Following news over the past two weeks that
the Government of Costa Rica is considering
taxing online gambling firms operating in
that country, operators have told
Gambling911.com they would leave if push
comes to shove.
On Tuesday, July 21, Finance Minister
Guillermo Zúñiga announced that the Finance
Ministry will introduce a bill in the
Legislative Assembly to impose a special 2
percent tax on gambling revenues - online
and offline - earned in Costa Rica,
according to the Tico Times. The bill is set
to reach the Legislative Assembly on Monday,
Aug. 3, and a vote on its approval is
expected to be held sometime in mid-August.
The Finance Ministry estimates that the
proposed 2 percent tax will generate $85
million in government income.
"The principal idea of the bill is to
regulate activity," Zúñiga said. "Gambling
is something that we are currently not
monitoring and, thus, not taking advantage
of. If we can regulate it, it could create
millions of dollars for the economy."
But those numbers are unrealistic should
much of the online gambling sector bolt.
Costa Rica's land-based casinos generate
very little revenues in comparison.
"They (The Costa Rican Government) needs to
understand our business and the consequences
before passing such a law," said Mickey
Richardson, CEO of BetCRIS.com, the largest
and most established sports betting
operation in Costa Rica in terms of bet
sizes taken. "Hopefully nothing will happen.
I think they would ask for our input and
then we might be more supportive."
Richardson estimates that the industry both
directly and indirectly employs some 10,000
people, perhaps even more.
"The industry pays above average salaries
and contibutes substantially to household
incomes," he said.
Learning From Great Britain's Mistakes
Costa Rica may want to observe what is
currently transpiring in the United Kingdom
right now.
The country's second largest bookmaker,
William Hill, this past week unveiled plans
to move its Internet operation from England
to Gibraltar in order to cut its tax bill.
The Sunday Times said UK-based internet
betting companies pay 15 percent of their
gross profits in tax, and that a move
offshore by William Hill would put pressure
on its rivals to follow suit.
Ladbokes, Great Britain's largest bookmaker,
may do just that. Ladbrokes is keeping its
cards close to its chest with a board
meeting due the day after William Hill's
results, according to the Daily Mail. But
while it is understood to prefer staying in
the UK, company sources admitted it would
have to respond to any move by William Hill.
The choice between the United Kingdom and
offshore locales such as Gibraltar is a
practical "no brainer". Those businesses
operating in England pay a 15 percent tax
while those based in Gibraltar pay 1.5
percent.
According to the Gibraltar Chronicle, a mass
exodus from the UK could spell trouble for
the Racecourse Owners Association who would
see a drop of £45 million in lost tax as
well as a £30 million loss in 10% levy paid
to them.
The Department for Culture, Media
and Sport has acknowledged that it does want
to level the playing field with overseas
businesses but crucially predicts little, if
no action prior to next year's General
Election.
Panama Might be Best Bet
Those operators we spoke to suggest that
Antigua and Panama offer the best options
for relocating.
Panama in the past few years has opened its
doors to online gambling operators, though
few have actually moved there due to Costa
Rica's "hands off" stance until now.
"I love Panama," Richardson admits.
BetCRIS has already opened a Caracas,
Venezuela office for its Latin American
clientele, though few would argue Caracas is
a fair trade with Costa Rica during these
times.
Panama City on the other hand resembles
Miami in many ways, with modern skyscrapers
and some of the best eating establishments
rising up over the last 15 years. The
Central American nation itself resembles
Costa Rica in that it abolished its army
over the last decade and is now among the
most stable nations in all of Latin America.
For now, Richardson admits it's a "wait and
see" decision. Nobody seems overly concerned
just yet.
In the past, the Costa Rican Government has
attempted to increase licensing fees for
operators, but few paid them and the
requirement was eventually dropped.
|
|
|
|
|
| |
|
|
|
|
|
