Prof. dr. Mehmed Jahić: Three different tax rates for gambling open the door for manipulation

According to the new Government proposal, winnings from gambling in the Federation of BiH could in the future be taxed at three different rates, writes the Patria News Agency.

According to the amendment recently adopted by the FBiH Government - and the draft Law now needs to be considered by the FBiH Parliament - tax on winnings from classic gambling in the Federation would be ten percent on winnings between KM 10 and KM 2,000, 15 percent on winnings above KM 2,000 up to KM 8,000, 20 percent on winnings above KM 8,000 up to KM 100,000, and 30 percent on winnings above KM 100,000. Also, for every deposit, the player will immediately pay a five percent tax.

This Government proposal has provoked sharp reactions from economic experts. It is considered that the proposal is not good because it leaves a lot of room for manipulation. The Government must offer a better solution.

Mehmed Jahić, a professor at the Faculty of Economics in Sarajevo, believes that such a proposal should not pass the FBiH Parliament, and that the Government should offer a different, simpler, and higher quality model for taxing gambling in the FBiH.

- I am against different tax rates for gambling and different bases. This draft law on gambling would open up the possibility for manipulation. Winnings can be anticipated in advance, so players can break down potential high winnings into several smaller ones in advance, and thus avoid paying higher tax rates. From this, we see that the highest tax rate would not benefit anyone - warned Professor Jahić in an interview with Patria.

For Prof. Dr. Mehmed Jahić, only a legal solution that would mandate that tax on gambling winnings be paid at a uniform tax rate, on all winnings, from one KM upwards, and that the same tax be paid on winnings from all gambling operators, without exception, is acceptable. Therefore, the Federation needs a uniform and thus simple tax. He proposes that this tax be ten percent.

Professor Jahić, he says, also has objections to the multiple taxation of gambling in the FBiH. As the FBiH Government now proposes, this activity in the FBiH would be taxed as many as four times.

The first tax would be paid on the deposit made by the player. And at a rate of five percent. Such a proposal has no legal basis. Player deposits are the sole and total revenue of gambling operators. Total revenue in the case of gambling is not considered turnover and as such, according to the VAT Law, cannot be taxed, not even at five percent as the FBiH Government now proposes.

From the total revenue earned during the year, the gambling operator pays wages to employees, pension and social contributions for them, pays rent, operating costs, etc.

The state wants to take tax a third time if the player makes a profit. Gambling operators pay the fourth tax at the end of the year, as profit tax.

- Multiple taxation is unacceptable - warned Professor Jahić, NAP writes.