UK remote betting tax confirmed at 15%
RGA hits out at rate while budget announcement also reveals online bingo duty will be more than land-based equivalent
UK Chancellor of the Exchequer George Osborne today has confirmed the looming Point of Consumption (PoC) tax will be set at 15%, disappointing an industry that fought against the rate.
The levy, which is set to be implemented in December, will be applied to gross profits derived from UK-based customers and is expected to include those generated through the offer of sports betting bonuses.
Bookies had been hoping that sportsbook enhancements would be omitted from the tax, a move which would have seen it aligned with other verticals such as bingo and casino where bonuses are tax-free.
The confirmation of the levy rate comes after fierce objection from operators and trade associations such as the Remote Gaming Association (RGA) and the Gibraltar Betting and Gaming Association, the latter having threatened legal action against the tax.
Last year, accountancy firm KPMG released an RGA-commissioned report which concluded that a rate of tax of “more than 10%” could put the future of a number of operators at risk.
And today, RGA chief executive Clive Hawkswood hit out at the government for failing to heed the warnings delivered by such studies.
“We have repeatedly said that the reason that the vast majority of well-known British companies operate from other jurisdictions is that the UK tax burden is unreasonably heavy and makes it very difficult to compete in the international market,” Hawkswood said.
“This new regime has given the government the perfect opportunity to correct past mistakes and it is very worrying that despite all the evidence it has not done so.
“Not only KPMG, but other respected experts at PwC and Deloitte, have all reached the same conclusion that any rate above 10% GPT is not sustainable in the long term. We cannot make the case any more clearly,” he added.
In recent financial reports, operators estimated what a 15% rate of tax was likely to cost them, with Paddy Power having suggested a figure of 37m and Betfair 34m.
The confirmation of the 15% rate also means that online bingo operators will find themselves having to pay a greater percentage of tax than land-based operators, after Osborne halved the levy on bingo halls to 10%.
The Chancellor also confirmed that the horse racing levy, which currently applies to UK land-based bookmakers, will be extended to include online bookmakers located offshore, although a review to look at more long-term commercial options will also take place.