India’s Director General of GST Intelligence (DGGI) has accused six casinos in Goa and Sikkim of tax evasion to the tune of 6,500 crore, equivalent to an eye-watering US$950 million.
According to a report in The Times of India, DGGI investigators inspected five casinos in Goa and one in Sikkim throughout May and June where it is alleged operators have been calculating GST based on net revenue when they should be paying GST on the total of all bets made.
While the mathematical absurdity of taxes being paid on wagers rather than revenue seems obvious to most, it hasn’t stopped officials from various state and national tax agencies arguing for just such a system to be enforced. India’s largest casino operator Delta Corp and Fantasy Sports operator Dream11 are among a number of companies to have already been targeted for alleged tax evasion as a result, with Delta’s share price having plummeted 30% since news of the GST issue first broke in early May.
In a recent note, Union Gaming’s Grant Govertsen observed that collecting the nation’s 28% GST on wagers would see taxation outpace revenue by five times.
“This is, of course, preposterous as there isn’t a single relevant jurisdiction in the world that taxes gaming revenue in this manner (either via a direct gaming tax and/or via a GST like in Singapore), and any attempt to do so would result in negative net revenue after paying winning bets and taxes,” Govertsen said.
“The math just doesn’t work and we would expect the company to prevail in any legal action should the government actually try to pursue a tax case.”