Web Shops: We Had 3-Month ‘Tax Holiday’

The Government’s changes to the web shop industry’s “sliding scale” tax structure will not prevent the sector moving forward with its legal challenge, a well-known QC says.

Wayne Munroe, pictured, who is representing several web shops in their fight against the budget’s tax measures, said he expects to file a constitutional motion today targeting what the industry still sees as the main issue – the “discriminatory” nature of the hikes.

He told Tribune Business that last week’s changes to the Gaming House Operator Regulations had remedied drafting errors, but did not affect the concerns of his clients.

Mr Munroe, who represents The Island Game, Paradise Games and A Sure Win, told this newspaper: “I saw that they have amended the regulation, which is good. What that does in effect is void the previous one, and the minister is correct that it would have come into effect the day it was laid.

“Our position was that there was no valid tax regime. From July 1 to September 20 would have been a ‘tax holiday’ for the gaming houses. They have put in the new regulations but all that does is remedy the improper drafting; not the matter of substance, which is the taxes being discriminatory, expropriatory and made for an improper purpose.

“I expect to be filing a constitutional motion as well. We will now challenge the new law on its substance. I had said from the outset that they could correct it by regulation but we have a claim for constitutional infirmity.”

Dionisio D’Aguilar, the minister responsible for gaming, had told Tribune Business that the web shop industry’s “sliding scale” tax structure took effect last Wednesday following changes to address operator concerns over its legality.

He explained that the amendments which introduced the “sliding scale” tax structure with May’s budget had used “the wrong terminology” to describe what should be used as the basis for calculating the amount web shops must pay.

Mr D’Aguilar added that the definition previously employed could have been interpreted as meaning that the different sliding scale rates, from 20 percent up to 50 percent, should be applied to “all the money” that patrons pay.

Instead, it should actually be based on that sum minus the winnings paid out by web shops, so the Government has moved swiftly to remove the term “revenue collected” from Regulation 57 and replace it with “all taxable revenue”.

Sebas Bastian, Island Luck’s principal, in an affidavit supporting his firm’s separate Judicial Review action argued that the “revenue collected” definition was so vague as to make it “unenforceable” and contrary to the Gaming House Operators Regulations.

He used it as a minor part of Island Luck’s Judicial Review, urging the Supreme Court to grant “a declaration that Regulation 57 (1) of the Gaming House Operator (Amendment) Act 2018 containing the term “revenue collected” is “vague and therefore unenforceable”.

Mr Bastian had earlier alleged: “The Gaming Operator (Amendment) Regulation 2018 provides that the purported sliding scale gaming tax on gaming house operators from 20 percent to 50 percent shall be assessed on the ‘revenue collected’. ‘Revenue Collected’ is not defined in the Gaming Act or the Gaming House Operator Regulations.

“In fact, Regulation 57 of the Gaming House Operator Regulations 2014 assesses tax on the basis of, and percentage of, ‘taxable revenue’ or a percentage of earnings before interest, taxes, depreciation and amortisation generated by the operations of the licensee. This term appears, I am advised by counsel, to be vague and ultra vires the Gaming House Operators Regulations 2014.”