Several months ago, SkyCity announced that they’re planning on launching and operating their own online casino site in another country. They even mentioned that they’re willing to pay any amount of tax to get the favour of critics regarding the unregulated site.
This is perhaps the reason why they’re brought a challenge by the Government of New Zealand, where they were required to pay an initial tax of $40 million even before their offshore operation starts.
Goods and Services Tax
GST or Goods and Services Tax is pretty simple if the provider of the goods and services are present in New Zealand. It clearly states on paper that the tax is payable. However, the matter becomes more complicated when the provider is not within New Zealand’s boundaries.
In SkyCity’s case, their services will be provided online without being present in New Zealand. This is the reason why they’re currently having problems with the tax of $40 million since there are more calculations necessary.
Why did SkyCity do it in the first place?
It is found that the online gambling industry is currently worth $45 billion and this only makes it even more tempting to enter the industry. However, since New Zealand does not allow such activities to happen within their boundaries, SkyCity resorted to using offshore sites instead.
While $40 million is not exactly what got SkyCity on the edge, there are some aspects of the GST problem that made it impossible for the company to decide their next move.
$40 Million isn’t Enough of a Problem
The fact that their services will be delivered mostly to New Zealand Kiwi gamblers through the internet makes it difficult to determine the underlying problem. However, in their case, they found that there are VPN services available on the internet nowadays.
SkyCity is now struggling to find out whether it’s a good move to continue their project without waiting for any changes in New Zealand’s gambling laws.
This is because New Zealand players may use VPN services to connect to another server, making it more complicated for the casino company.
Subsequently, players from around the world besides New Zealand may connect to the country’s server making them seem like residents of New Zealand.
Since the GST is different when the gamblers are playing in or out of New Zealand, both situations will prove to be difficult to find a solution for.
SkyCity’s Solution for the Underlying Problem
For SkyCity, there are many aspects that need to be taken into consideration, such as interest or late GST.
However, they already determined that if they want to solve this problem regarding GST, they’ll need some help from the Government to sign into law some kind of change in their existing gambling legislation.
SkyCity’s move is likely to benefit the whole nation due to the tax rate. This only proves that while companies need to rely on their own nation, countries also need to rely on companies.