UK Revises Online Gambling Taxation System

The UK government has been working for a while to prepare a proposal to impose secondary taxes on offshore gambling firms. Under the current tax structure, it is estimated that the government is losing around £300 million revenue every year.

While offshore companies don’t have to pay huge taxes, onshore operators have to. Two leading online gambling firms in the UK that operate onshore are Bet365 and Gala Coral. Carl Leaver, the chief executive officer of Gala Coral stated that the high taxes imposed on onshore companies, is cutting down their profits significantly. So, Gala Coral is considering moving offshore if the present tax system in the UK is not changed.

New Tax System to be Based on Operating Location of Online Gambler

A draft bill has been prepared in the UK, according to which taxes will be imposed on firms according to where their online gamblers play, rather than the location where operators’ servers are based. This will help eliminate the distinction between onshore and offshore companies.

Penalties will be imposed on firms which don’t abide by the tax rule. These firms will be prevented from advertising in the UK and be prosecuted in case they enter the country. The UK’s online gambling industry is regulated by the Department for Culture Media and Sport. The body stated that it will be executing a government sponsored bill when the Parliament allows. It is expected that once the new online gambling bill reaches the committee stage, it will have the full support of the ministry. However, a few technical amendments may be included by cabinet members.

Ladbrokes Comments on Proposal to Impose Taxes on Offshore Companies

Ladbrokes, a British bookmaker, moved offshore recently. The corporate affairs director of the company, Ciaran O’Brien expressed his views on the government’s decision to tax offshore companies. Ciaran O’Brien stated that according to the Association of British Bookmaker’s reports, the total amount of tax paid by online gambling real money firms in the UK is £1 billion. Only £600 million profit is retained by the industry. Ciaran O’Brien added that increasing the tax rates will lead to a proliferation of unlicensed sites in the UK.

Land-Based Casinos Giving Suggestions

The representative body of land-based casinos, National Casino Industry Forum, offered a suggestion that is different from O’Brien’s. According to the forum, online gambling firms should be taxed equally as land based firms. While offshore firms are paying no taxes, land-based casinos are paying as much as 50% tax.

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