Poker Players In Israel Could End Up Paying Higher Taxes After Au

Posted by Carolyn on Nov 06, 2017 Posted in High Stakes Poker News, Live Poker News, Online Poker News, Poker Players | No Comments »

Poker players in Israel have been used to paying a 25 percent tax on their winnings in the past and they were allowed to deduct their numerous expenses in attending poker tournaments across the word from their winnings. Legislators then increased the gambling tax for lotteries, poker players and prizes to 35 percent which is rather high but poker players have been able to work with their tax consultants to pay the bare minimum.

Things are all set to change as Israel’s Tax Authority (ITA) is turning up the heat on poker players in the country. The ITA does not want poker players to classify their income under the gaming category which has a 35 percent tax rather but wants poker players to classify their income as business revenue going forward which attracts a rather heft 50 percent fee. The proposal hasn’t gone down well with Israeli poker players who believe that the new legislation is too stringent and does not take into consideration all of the information involved in their winnings.

Not Everything Can Be An Expense

The ITA did raise the issue that players were showing a massive amount of expenses when filing their taxes. Poker players pointed out that they do incur a lot of expenses in the form of air tickets, hotel accommodation and travel which is required when they attend poker tournaments across the world. The ITA accepted their explanation and will allow them to continue to file these as expenses.

Poker players also highlighted the fact that in major tournaments or high stake events where the buy-ins are massive, they often rely on financial backers to put up the buy-in in exchange for giving them a significant percentage of their winnings. Poker players pointed out that in such cases it was inaccurate for the tax authority to conclude that they were receiving all of their winnings.

Actual Winnings vs. Published Winnings

An example of this would be that player A decides to enter a tournament where the buy-in is $10,000. Since player A does not have or does not want to take the risk of putting up this buy-in, they will find a financial backer who is willing to stake the entire buy-in or a major portion of the buy-in for maybe a 75 percent stake on whatever player A ends up winning. If player A wins nothing, then no payment to the financial backer is required.

If player A ends up winning the high stakes tournament and receives $100,000 in prize money, player A will have to pay the financial backer $75,000 and take home only $25,000. Websites like the Hendon Mob will show that the total prize money won as $100,000 on which the ITA will claim its taxes. Poker players argue that the real taxable amount in this case should only be $25,000 – something that the ITA is not willing to accept at the moment.

The ITA is currently going after an Israeli player and the ruling in the lawsuit could very well determine how poker players in Israel will be taxed going forward.

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