€28mn tax bill from Israeli authorities For Playtech

€28mn tax bill from Israeli authorities For Playtech ( Click to Enlarge )

Playtech is one of the most successful online casino brands but the company has just announced some more bad news for investors as it is being hit with a €28mn tax bill by the Israeli authorities.

This news follows on from its December earnings warning which had such a bad impact on the company’s share price. It seems a civil tax audit of Playtech from Israel’s regulatory authorities has resulted in a request for an extra €28mn in taxes for the years 2008 to 2017. The announcement was made on 2 January 2019, following the audit which was finalised in December.

Internal Transfers

The additional tax relates to adjustments for transfer pricing for Playtech’s Israeli business operations, which means it is all due to internal transfers between different departments.

Although this added tax liability may seem small fry to a major online casino brand like Playtech, the company had already warned its investors that forecast earnings for 2019 would be reduced. Playtech stated this was due to substantial tax rises which they estimated are likely to be between €20mn and €25mn.

A great deal of this potential tax increase relates to recent Italian legislation, where online licence application costs have been hiked and gambling advertising has been banned altogether.

Following its December earnings announcement, Playtech’s shares dropped by around 7%.

Good News

Some of Playtech’s recent good news, though, it that its Quickspin subsidiary will be one of the first providers to enter the new Swedish online gambling market.

The company has also teamed up with iovation and is in the process of launching the first online casino to be regulated in Poland.

All these positive signs will feed into the long-term growth of Playtech, so investors really don’t need to worry too much about the business earnings downgrade announced in December after all. Playtech is a major player within the global online casino marketplace and has a long and successful history behind it.

It’s highly likely the business will experience more blips along its planned growth cycle, but new markets and new business partnerships will help smooth these out.