UK Online Gambling Industry Moving Towards New Regime
Mar 25, 2012 Online Gaming Online Poker
The UK’s Chancellor George Osborne proposed a new tax system to impose a secondary tax on the offshore online gambling operators. According to the current tax structure, offshore companies do not have to pay huge taxes which the onshore operators have already been paying. It is estimated that the UK government is losing around £300 million revenue every year. This new system has completely overlooked the offshore operators making huge profit from UK-based customers. It is believed that the system will force all the online betting operators including the companies like William Hill and Ladbrokes which earlier migrated to places like Gibraltar, to pay taxes on the revenue they generate from the UK based players.
According to the Department for Culture Media and Sport, which regulates The UK’s online gambling industry, the new tax regulation has been formulated in such a way that it would encourage the UK-based online gambling operators to return to the UK. It is expected that this will promote employment opportunities and revenue for the UK- based employees. According to the regulation, the new tax system is going to be enforced at the point of consumption. This as a result will cause the offshore operators to lose the advantages of locations provided to them. According to the Chancellor Osborne, around 90 percent of the money spent by UK-based customers on online gambling goes into the pocket of offshore companies, which has been putting the operators of the country under rigorous pressure. However, the UK-based poker players, who do not pay taxes on their earnings, would not be affected in any ways by the new tax system.
Now, all the online gaming operators would require a license from the UK Gambling Commission to operate in the country, which will force them to pay the taxes. However, the companies i.e. Coral and Bet365, decided to remain in the UK have welcomed the new system. The onshore operators in their expression of relief have stated that it would preserve taxable revenues in the UK and protect consumers. On the other hand, the association of British Bookmakers has shown their disappointment and called the system unsustainable which has not adopted a neutral methodology of the tax system.
Only time will, however, tell whether the UK would accordingly impact companies’ revenues, corporation tax or disrupt existing operations in the online gaming industry.
