Mysteries have been following the Internet gambling business in Bulgaria in recent years. Under the new Gambling Act all operators of e-gambling taking bets from Bulgaria are subject to compulsory licensing, but it is not happening because not all government regulations are ready. On the other hand, these sites are formally suspended (not to let them make non-taxable profits). But after being introduced in two tranches in the blacklists of the State Gambling Commission, they continue to accept bets via servers with obscure locations.
Suddenly the media started talking about the name of the new head of State Gambling Commission – Ognemir Mitev. Noteworthy is the headline: Reshuffles at the Gambling Commission, Hundreds of Thousands of Bulgarians Wait for Change.
But one should also take into account the text: A new head of the Gambling Commission was appointed. Ognemir Mitev an industry expert, has been a member of the committee since 1998. According to insiders, given his 13-year career path, Mitev is hardly a political appointment. What follows is a lachrymose tale of his professional career, starting from junior expert and reaching the position of chairman of the commission.
But that’s not all. The description is followed by a melodramatic finale, which reveals that the appointment of Mitev gives new hope to hundreds of thousands of Bulgarians with blocked money now in the betting companies because of an insane law.
The BANKER engaged in finding out the truth. Such a person really exists. However, representatives of the State Gambling Commission said they do not know that their colleague was nominated for the chairman position. Mr. Mitev himself was not available for comment.
Our suspicions that the nomination is the work of the Industry lobbying were answered by the Bulgarian Association of Manufacturers and Operators in the Gaming Industry. They declared that they had nothing to do with any nomination and no one asked them.
Government source, however, suspected the Finance Ministry in testing public opinion. They let out a name to see if it will cause any social disapproval. Only if it does not, they will appoint the person, said the paper’s source. They may have learnt their lesson, was pointed out.
Another mystery about this highly-strung sector is related to taxation. Media popped the information that is thought to reduce the tax on e-gambling from 15 to 5 percent. This statement was quoted to be made by Chairman of the Budget and Finance Committee of Parliament Yordan Tsonev.
However, Mr. Tsonev, flatly denied for the BANKER that he ever commented anything about the taxation in gambling. I read carefully the government programme, and there is no such thing there. As far as the Parliament is concerned, I personally will not allow such a change, said Tsonev. He vowed to post rebuttals to the media quoting and to those who plagiarized the false information.
Ministry of Finance, however, confirmed that they were thinking about regime change. This will happen with amendments to the Law on Corporate Income Tax. Two of the options – to reduce the rate of 15%, which currently taxes the turnover or to move to a new regime – to tax only the profit as the difference between the sums of bets and the winnings paid out. In both cases, the result will be a reduction in the effective tax rate.
This position was joined by the author of the new gambling law: ex-MP Darin Matov. He told the BANKER that when the law was mulled over the legal presumption was for a flat rate for ground-based and Internet gambling. It is normal, he said, since the country has a flat tax, the same model to apply also to gambling and tax and have a tax rate of 10% on turnover (i.e. the volume of bettings). If this is found to be unacceptable, he said, then we can put a 20% tax rate on the financial results. (The financial result is the difference between the value of bets and the amount of winnings paid out.) Matov suggested that in the next 2-3 years the turnover tax be abolished and then move to taxing the financial result. During this time, the National Revenue Agency should be able to finally tie the web servers with its one ones, so that it can record in real time the turnover and paid profits, said Matov.
The BANKER
