It is quite obvious that no one would like to pay tax on any earning. However, the hard fact is that the government needs money to run their show, and as such taxation is the only way they can earn that money legally. Yes, the gamblers have to pay taxes if they are playing using legal facilities.
However, even in the case of legal gambling tax rates vary widely from country to country. The form of taxation is also as varied as the rates. While in some countries the tax rate could be quite high, in some other it negligible.
With the opening of many online casinos and each of them trying to attract many players, it is very difficult to know which one is good or which one is unfair and dishonest. It is very important to read a few online casino reviews before selecting the right online casino. The licensed casinos will report you earning to the IRS for taxation purposes. If you check out this article about 10CRIC’s casino from the review website Efirbet, you will get to know a lot of information about the casino.
Some of the countries levy direct taxes some indirectly tax the gamblers. The method of indirectly taxing the winnings is by levying zero tax on the gambler but charging tax on the Gross Gaming Revenue (GGR) of the operators. This, in other words, is the amount of net profit earned by the operator (net of the total amount wagered by the gamblers minus the total winnings). The online casinos transfer the burden of the tax charged on the revenue earned to the gambler by adjusting the actual payouts made to the winnings. Hence, in the end, the gambler loses a part of the winnings in form of indirect taxes.
Following are examples of countries, which charge tax/duty on GGR
The taxation rules in Italy for all gambling activities changed after the government introduced the new tax regime from 2019. The venues offering online gambling now have to pay tax at the rate of 25% on GGR.
In China gambling is not legal. However, Macau is the only place where it has been made legal and this attracts large revenue. The tax rates are also quite high. Here the operators are charged at a rate of nearly 39% on the GGR, which includes 35% tax, 1.6% as a contribution to Macau Foundation, 1.4-2.4% contribution for social and economic purposes.
The U.K. has been one of the top gambling countries for quite a long time. The revenue earned from gambling is growing steadily although the tax regime is not very stringent. Until 1 October 2019, the online casinos operating from the U.K were being charged 15% on the revenue but now this has been increased to 21%.
Now a shortlist of some of the countries that levy a tax on the winnings from playing on online casinos are given below.
In the USA the taxation rules vary from state to state. For the US residents, the tax rate is 25% of winnings while the recreational International Player has to pay a duty of 30% on the winnings.
Laws regulating online gambling are quite complicated in India, although this is gaining in popularity. Indian casinos are not permitted to provide online gambling websites. However, offshore companies are allowed to create online casino sites and open it up for Indian players as long as the transactions are in Indian rupee. As such, the Indian gamblers must declare the winnings as earning and pay tax at a flat rate of 30%.