Point of Consumption: What happens next?
With the UK remote betting tax confirmed at 15%, how will events unfold in the lead-up to implementation?
The UK government yesterday confirmed the news the online gaming industry had expected and feared; that gross profits derived from UK-based customers will be subject to a 15% levy.
For the Remote Gaming Association (RGA), one of the industry groups lobbying hardest against such a rate, the confirmation was disappointing and it reiterated the view a 15% rate of tax will see a significant share of the UK market migrate to unlicensed operators.
However, despite losing the battle, RGA chief executive Clive Hawkswood remains determined to win the war and will continue to make the case for a rate he feels will allow operators to flourish.
“We will continue to engage with HM Treasury in pursuit of what we believe should be the common objective of establishing a viable long-term UK market where licensed and tax-paying companies can not only survive but thrive,” Hawkswood says.
The Bill is currently in the final throws of its Parliamentary passage, with the House of Lords having completed its inspection of the legislation earlier this week. All that is left is for the House of Commons to rubber stamp the horse racing levy amendment, as set out yesterday, and Royal Assent could be granted before the end of the month.
If this happens then we should expect a go-live date of late-July to early-August where offshore licence holders will be able to operate for a period of approximately four months before the 15% levy comes into force on 1 December.
Last year, the Gibraltar Betting and Gaming Association (GBGA) threatened legal action should the government go ahead with its Point of Consumption (PoC) tax and regulatory plans.
The GBGA, which speaks on behalf of members such as William Hill, Ladbrokes and Gala Coral, is also of the opinion the UK PoC regime will feed the black market, and puts forward Italy, where unlicensed operators are estimated to control 50% of the gaming market, as a case in point.
The body has yet to decide whether it will make good on its threat to challenge the PoC regime in the European courts but considering that not much has changed since last year, the arguments the GBGA thought relevant in 2013 should be just as relevant today.
What might have changed, however, is the appetite of operators to take part in a legal battle they may consider unlikely to win. The industry appears to be in a state of reluctant acceptance with plans to mitigate the financial hit well under way.
According to John Hagan, partner at law firm Harris Hagan, the move to a PoC regime serves to greater enforce the intention first set out by the previous government.
“In March 2007, Gordon Brown announced a tax rate of 15% and the overwhelming majority of remote operators chose not to apply for a UK licence,” Hagan said. “Seven years on and George Osborne has not made the same mistake – the rate may be the same, but the tax is no longer optional.”
As well as offsetting some of the addition financial burden, operators will also be focusing on ensuring they are in position to apply for an operating licence from the UK Gambling Commission when the licencing window opens.
Exactly when this application process is due to get underway is still unknown, however, the regulator has given guidance that it will be “at least two months” from the date the Gambling Bill, the piece of legislation being used to introduce the PoC regime, is granted Royal Assent.