- Romanian government adds 2% to the gambling tax in the country
- The tax will have operators pay retroactively for 2018 in one lump-sum payment
- This is not the first time Romanian lawmakers have hit the industry with hefty taxes
- 888 could reportedly be withdrawing from the market
Romania has introduced a new tax on gambling turnover, adding more strain on operators to cope with expenses.
Romania’s New Gambling Tax Bites into Profits
Romania has introduced a new 2% tax on gambling revenue, which will directly impact the profits of operators in the country. The measure was voted and pushed along ahead of the Christmas holidays, with the government having long been warning for a new uptick in the tax levels related to gambling.
The government has introduced a number of other taxes affecting other industries as well, such as telecommunication services and the banking sectors. All changes are now in effect as of January 1, 2019. The 2% tax imposed on gambling operator is an auspicious development given the initial plans of the government, which wanted to introduce a much more restrictive and potentially industry-disruptive measure.
Originally, Romanian lawmakers planned 5% turnover tax on all online properties and mere 3% on any land-based casinos. On top of that, all operators already have to pay 16% on their gross gambling revenue. The new 2% hike will be lumped together with the existing rate, leading to 18% tax levy on gambling operations.
This is not too high, given that gambling tax in the United Kingdom and Italy is going up year in and year out. However, the Romanian government wants to bank quickly on the changes and is going to apply the tax retroactively, meaning that financial performance in 2018 will be levied with the new +2% rate.
All operators have time until February 25 to honor all payments. The money will have to be paid as a single instalment to the budget. It has been the custom of lawmakers to buffet the gambling industry in the country with restrictive measures, using the fact that the sector is not loved by the public.
A Brief History of Gambling Taxes
In 2015, the government made a staggering decision whereby any future licensed companies would need to pay back taxes equal to 20% of the generated revenue from Romanian government between 2015 and 2009 – a decision that has fallen through since due to inability for any of the active operators to furnish such an amount.
As to the active operators and brands on the Romanian market today, the 22 players feel the mounting pressure that bites not only into their profits, but the viability of their business. Recently, 888 poker cancelled a tournament initially scheduled for March, 2019 and issued a statement that despite the scale-down, the company was not planning to withdraw from the Romanian market.
However, 888 is not planning on starting any marketing campaigns any time soon in Romania, which can be interpreted as a clear sign of the company’s hesitation to operate in the market.
Meanwhile, neighboring Bulgaria’s economic growth has been marked with the iGaming market expanding accordingly. Bulgaria also serves as headquarters for a number of software makers and casino brands and already has seen important players enter the country, such as NetEnt and BetGames.