Bulgaria Sees Chaos in Taxation of Gambling

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Bingo halls and lottery establishments are taxed at a 10-percent tax rate as groceries, although profits for the organizers of gambling games are several times higher. This secret was revealed a few months after the revolutionary change in the whole philosophy of taxing on this specific activity was passed in Parliament. It was part of the amendments to the Gambling Act, adopted a week before Christmas 2013, but the parliamentary chaos at the second reading of the texts seems to have had an extremely negative impact on the quality of legislation.

„These activities are subject only to corporate taxation as if they were ordinary commercial sites and are not subject to the requirements of the Gambling Act, this is a huge oversight,“ MP Yordan Tsonev, head of the Parliament’s budget committee, told the BANKER. He regretted the mistake. „GERB were convinced that I suggested a lobbying law, but this can’t be further from the truth, while the socialist MP Georgi Kadiev turned the debate into a personal battle against me, for some reason,“ explained Yordan Tsonev.

„Mr. Kadiev apparently decided to fix the things a few days ago and submitted in Parliament a new change to the Gambling Act,“ said Tsonev. A check carried out by the BANKER weekly showed that the proposal of the socialist MP was for an introduction of a 15% tax on all collected bets in bingo halls and all lottery games.

„We agree with the proposed changes to the extent that they affect the tax rules. If adopted, roughly the Treasury will get additional 2 million levs“, said a representative of the Commission on Gambling.

Another foul of the law was the double tax burden on ground-based (or offline) gambling. Mr. Tsonev explained that instead, as it was before, for this form of games of fortune to pay a 15-percent pre-tax (as a fee) changes were made to raise more than three-fold the tax burden of these organizers. Presently terrestrial objects owe a 15-percent tax on bets. This is a very high tax because a 15-percent tax on the revenue can be recalculated at least at a 30-percent on the difference between revenue and paid profits (costs) – equal to a profit tax. On the top of this, they owe a 10-percent corporate tax and, and in some cases the total burden exceeds 50 percent.

The proposal of Mr. Kadiev, however, does not envisage facilitating this burden at all. The financial blade of the socialists, moreover, requires the collection of a 20-percent tax on all collected fees and commissions for participation in organized tournaments at casinos or gambling halls. In casinos they organize poker tournaments from time to time, experts point out.

On the other hand, promotion and distribution of profits from traditional lottery must be conducted in public, and these lottery tickets will acquire the status of securities issued by the state.

There is also a change in the annual fee payable to the Treasury to combat gambling addiction. The organizers of the games with betting on sporting events, horse and dogs, as well as games with betting on random events, instant lottery, lottery and lotto will have to pay 10,000 levs per year, up from the current 5,000 in this connection.

The BANKER

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