Taxation on new, emerging sectors isn’t a new problem. Although the nature of the businesses and how governments collect tax may adapt with technological advances, the general foundation remains the same. Deloitte is one of the authorities, if not the authority, on tax and accounting matters on a global scale. It treads the line of being a significant, knowledgeable and academic authority while working with some of the world’s biggest corporations and governments to find a middle ground where tax can be levied reasonably and efficiently.
Taxing online casinos – positives to consider
Online casinos sit in a unique bracket, as they have the flexibility to set up their main tax offices in the most tax-efficient bases possible. Countries such as Cyprus, Gibraltar and Malta have significant numbers of casino companies registered in their country because of the tax breaks they get and the incentives they have to set up shop there.
The 23% tax rate for Chilean digital casinos sits right in the middle of the scale. For many, this is a fair compromise, ensuring companies are taxed fairly but not overtaxed to such an extent that they set up their operations in another country. Finding the balance is vital. When a big company decides to go offshore, it’s not just the tax base that’s lost but a number of jobs in Chile, too, which is yet another key consideration. Chile will not want to risk losing their top casinos, and Chilean casino gamers won’t be too pleased if their top sites, such as onlinecasino.cl, decide to set up in another country.
There’s a significant market for Chilean casino gaming, which will have been factored into the conclusion Deloitte came to. So long as the balance is found, these companies can continue building their gambling enterprises as per Deloitte’s advice.
Ultimately, any successful corporation should pay its fair share in tax – few would argue this case. Implementing a rate of 23% allows casino companies in Chile to contribute to the infrastructure and society where their customer base lies.
Why taxation is vital
Taxation leads to greater transparency, and by meeting legislators halfway, the compromise usually allows common ground for both the industry and legislator to be happy with the overall outcome. In industries ranging from sports and medicine to hydrogen energy, ensuring there’s a healthy, competitive business environment and a fair method of taxation it is often one of the trickiest domestic challenges for any government or legislative body.
Perceived negatives
Companies moving their entire operation to a more ‘tax-efficient’ location isn’t a recent development. For those that do relocate, a move can save them millions, but it also sucks millions of dollars out of the original tax base that can be used for infrastructure and societal development.
Anti-tax campaigners argue that the money is often spent on the wrong resources and that societal development doesn’t make up a sufficiently significant part of how tax is used. In any event, a corporation should not be paying less tax than an individual – that’s something that most people agree on.
Unfortunately, this argument will have been factored in heavily by Deloitte, as they’ve settled on this figure. After all, corporations will be more than happy to move if it means saving money.
While countries such as France and Greece have online casino tax rates that discourage many companies from setting up there (30%+), the latter has notorious issues addressing tax evasion. There are also countries that impose lower than the proposed 23%, so it is ultimately about compromise.
Online taxation challenges
It’s not just tax officials in Chile who have sought guidance from some of the stalwarts of accounting and finance; Deloitte has explored digital businesses and how they’re taxed across several continents.
It is a legislative minefield, and even though digital companies – especially casinos – now dominate their respective fields, many countries have not yet settled on the best way to tax them.
Casinos are one of many sectors that are now exclusively online, with many of the world’s biggest sites not having any physical buildings or locations, making tax arguments more difficult. Cryptocurrency companies, tech giants and digital nomads are all examples of businesses in the modern era that are challenging domestic governments to tax effectively.
Final thoughts
It will take some time, but Deloitte, having weighed up the online casino taxation landscape across Europe and the rest of South America, has concluded that the proposed 23% tax rate will keep Chile competitive on the continent – it feels like a fair compromise.
Early reports suggest that casino companies agree, but only when we see it ratified and rolled out will Chilean casino companies be able to gauge if it is indeed a fair rate. While you won’t find many companies that believe they’re being taxed fairly, the compromise is in still being able to operate in the country and contribute positively to infrastructure, be it road building, healthcare or schools.
Deloitte has more experience than most in mediating these concerns between governments and industries, so this is a figure they would have considered most carefully. It seems a fair deal based on the overall landscape and the global competition.
