New Zealand Plans New Tax Regime for International iGaming Operators

New Zealand is moving towards fulfilling its commitment to tax international internet gambling companies that offer their services to people living in the country. The government intends to levy a point of consumption tax on all online bets placed by New Zealanders. Operators will also have to add betting information fees to their cost of doing business in the country.

The above changes will come into effect if the Racing Amendment Bill gets the nod from Parliament. David Bennett, the country’s Racing Minister has started off his tenure in office by introducing this bill as an amendment to the outdated Racing Act of 2003. The move is intended to give domestic operators a good chance to compete against their international competitors that are already well-established in the business and in customer mind-space.

Changes to the country’s out-of-date laws have been in the offing for quite some time now. In fact, the amendments proposed by the minister were initially recommended by an Offshore Betting Working Group almost two years ago as a measure to bolster the financial situation of the New Zealand Racing Board (NZRB). The NZRB’s TAB betting service had shown itself to be woefully unprepared to deal with the needs of modern customers since it had not invested in the right technology.

While 2015’s Working Group had suggested a 2% tax on betting turnover, Bennett’s amended bill does not specify what rate of consumption charges will be levied on international operators. However, the bill does ask these operators to provide information regarding their transactions with bettors from New Zealand so that the exact sum to be charged can be computed. International operators will not have to pay more than the total amount of money that the NZRB pays to domestic sports and racing organizations in a single fiscal year.

The proposed bill is also vague about the fees that will be charged to international operators for access to betting information about sports or race events taking place in the country. However, there will be a threshold of NZ$60,0000, and operators who earn less than this sum from the country will not have to pay either the consumption or the information charges.

The precise charges will only be revealed when the government submits a new set of rules to parliament. There is no fixed time frame for this at present, but it is expected to happen within a short time.

There will be penalties for operators who do not conform to the rules once they become law. Individuals who break the law will have to pay NZ$200,000 whereas companies will be fined NZ$500,000.

The proposed law will also give the NZRB a number of privileges to enable it to function in a highly competitive environment. For starters, it will be permitted to offer in-race wagering with the condition that the bets can only be placed on the final result and not the events within it. The NZRB will also be permitted to deal with international and domestic sports events even if it doesn’t have a betting agreement with the concerned sporting organisation that oversees its running. In case there isn’t any domestic national sporting organisation for a sport then the NZRB would have to come to an agreement with Sports NZ to understand how revenue from wagering would be distributed.

The New Zealand government is clearly pushing to curtail the ability of internationally licensed internet gambling companies to operate profitably in this market and it is not interested in increasing the size of the market. However, the local punters will only be interested in using the NZRB’s TAB gambling product if it offers an attractive and reliable gambling experience.

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