How New Tax Regulations Will affect The UK Gambling Industry
The global gambling industry has always had a hefty contribution from the UK market despite traditional meccas, such as Las Vegas and Monte Carlo, not existing within British boarders.
However, with the rise of online gambling establishments, such as SuperCasino, the UK’s position within this increasingly virtual market has risen even further.
It has been predicted by the Gambling Compliance Research Services (GCRS) that the net revenue of online gambling, within the UK, is set to rise to nearly £2.5 billion in 2014 with a predicted total of £3.2 billion being generated in 2016.
This is unsurprising when considering that online casinos’ mixture of real-money betting and live streamed-event has enticed gamblers previously unable, or unwilling, to locate and travel to physical casinos.
However, the rise of these virtual establishments, and the revenues they generate, has caused the implementation of new tax regulations for this booming sector within the UK, which will somewhat setback these profits.
Since the 1st December the rules concerning General Betting Duty (GBD), Pool Betting Duty (PBD) and Remote Gaming Duty (RGD) have been altered to incorporate the changing infrastructure of the online gambling industry within the UK. This adapted legislation – which can be viewed in their entirety on Gov.uk – was designed to tackle the tax loophole which allowed establishments to be based offshore and therefore gaining untaxed profits from UK consumers.
The fundamental change within the UK gambling tax laws made by these amendments is that the point of taxation has been changed from the ‘place of supply’ to the ‘place of consumption’.
Therefore, rather than revenue being taxed in bulk based upon the regulations of the country the online gambling provider is located, each individual transactional will now be taxed if it originates within the UK. The taxation being 15 per cent of the transaction.
But it has also been determined that operators based in the UK, who supply remote gambling to foreign customers, will no longer be liable to GBD, PBD or RGD on any of those transactions.
To regulate and facilitate this new taxation, the legislation – named the Gambling (Licensing and Advertising) Act 2014 – will also require all operators, who wish to legally have access to the UK market, to have a license from the UK Gambling Commission. To gain this license, providers will have to submit supported documentation realistically portraying their UK user-base and prove that they will, or already have, placed mechanisms in place to accurately record their number of UK-based customers.
These new taxation laws are expected to generate around £300 million a year for the Treasury’s coffers whilst protecting UK consumers from unregulated or dubious online gambling suppliers.
However, considering the UK market’s position with the online gambling sector, it is unlikely that this increase in taxation will stop providers engaging with British consumers.
Furthermore, this removal of tax-loopholes, and thus the appeal of offshore headquarters for UK operators, may facilitate a return to Britain for numerous online operators which will further assist the UK’s economy with employment opportunities. Especially if these operators provide services for other markets, as the new law’s removal of GBD, PBD and RGD for these customers will benefit he companies greatly.
