Israel is taking various measures to combat the problem of unreported income and tax evasion which is highly prevalent in the country. The Israel Tax Authority has previously targeted people with huge stakes in real estate and has also conducted a thorough search of bank accounts located in the country and abroad. The next target is expected to be the gambling industry which is suspected to be the reason why there are a number of poker players in Israel enjoying a lavish life style despite reporting less income.
Local news “Globes” has obtained information from tax sources which claim that some of these cases pertaining to a selective number of poker players are currently being investigated. Preliminary investigations show that several professional poker players are earning money that range from thousands to millions of shekels every year which can be attributed to their earnings in worldwide poker tournaments, casinos and online tournaments.
Tax officials started arresting players after finding enough evidence about their earnings and tax evasions. The investigation which began two weeks ago resulted in the arrest of a director of the Israeli Poker Academy along with the arrest of another person who is suspected of being involved in organizing poker games.
IT Slabs for Poker Income
Even though many poker players tried to evade taxes in the past claiming that their income was mostly from lotteries, prizes and gambling in order to avoid paying higher taxes, the authorities did not accept their claims and asked them to classify their poker income as income generated from business.
This is because in Israel, the income from lotteries and games are taxed at 35%. On the other hand, business income is taxed at 50%.  In the past, some players asked the tax authorities to not impose taxes on expenses associated with their ‘poker business’ like those related to flight and hotel bookings. The tax authorities agreed to this request and many players started reporting their poker income by submitting the adequate receipts.
However tax officials refused to recognize the expenses players incurred on their participation fees. The participation fees amounts to thousands of dollars in many tournaments. There are a number of poker players who raise this buy-in amount by taking out a loan from money lenders or financial backers who are willing to lend out this money in exchange for a percentage from the players winnings.
Players Might Have To Pay Backdated Taxes
Tax sources have informed “Globes” about the ongoing dispute between Tax Authorities and a poker player named A. The player named A is a professional poker player who has played many tournaments over the course of his career and during one such tournament in Cyprus in 2010, he was supposed to pay $25000 as participation fees. A did not have the money to pay for it and entered into an agreement with the tournament organizers where he could play under the condition that he will be rewarded only 10% of the amount on winning the tournament and the rest of the proceeds along with the entry fee and 3% tax would be taken back by the tournament organisers. However, he could get away without paying anything in case he incurs a loss.
Player A agreed to this offer, participated and won about $207,000 in the game. But he was only paid a meagre amount of $17,000 by the tournament organisers based on the deal agreement. Player A used this winning amount to continue playing and lost the entire amount along with $1,500 of his own money. The player is now being asked by the tax authorities in Israel to consider his winning income as business income and pay a higher tax. But Player A is not convinced and is arguing with the authorities over his situation because although it appears he won a lot of money, his actual returns amounted to nothing.
In August 2015 the Tel Aviv assessment office no.3 issued player A an assessment which stated that the player failed in reporting his prize winning amounts, his salary income and did not submit any proof for his incurred expenses during the course of 2010 – 2012. The Tax Authority finds it easy to trace Israeli poker players revenues as their winnings are reported on many websites like the Hendon Mob. There are some reports that poker players could be subjected to paying back dated taxes based on their revenue in previous years.

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