Earlier today, the Remote Gambling Association shared its comments on Montenegro’s proposed online gambling taxation during a press conference in the country. According to the trade association, the substantial taxes imposed on local licensed operators will result in citizens being allured by providers operating on the black market.
Bearing in mind its experience with different European tax regimes, the RGA pointed out that high taxes usually lead to operators not being motivated enough to apply for a license. Thus, residents tend to resort to unregulated services, which, in turn, results in the government not being able to collect the due levies.
In other words, the current taxes that operators are supposed to pay make them unable to compete with offshore ones, which are free of local duties and offer better prices and opportunities for customers.
The RGA emphasized on the fact that at present, more than 50% of the online gambling market in Montenegro is served by unlicensed operators. If the licensed ones decide to withdraw their operations from the country’s gambling market due to excessive taxes, the aforementioned figure will most certainly rise.
RGA members also commented on some European countries’ decision to implement a gross profit tax for online gambling operations. According to them, a well-structured tax offering a reasonable effective rate can be quite beneficial to governments, operators, and even consumers.
The gross profit tax is imposed on a given operator’s profits. As many believe, it urges providers of online gambling options to offer even wider choice of services. This, in turn, creates a considerable demand for particular products and results in substantial tax revenue for the countries’ governments.
In Montenegro, however, the revenue tax is imposed on consumers’ stakes. Due to this, operators are not able to provide certain types of games, which has led to a decrease in the demand for particular products. Therefore, less considerable tax revenue is generated for the government.
It seems that residents of Montenegro are not particularly keen on the 15% winning tax as more than 20,000 have signed a special initiative urging the local regulator to cancel the high levy or implement due changes. They suggested that only winnings over €500 should be taxed.
RGA presented the government with an alternative solution for the issue. It stated that the country might want to adopt the gross profit tax at a reasonable rate. Thus, both regulators and operators will be benefited. The tax will lead to lower compliance costs for the providers of online gambling options and lower costs for the government as well.
