UK profit tax set for MP scrutiny
Finance Bill containing 15% Point of Consumption tax proposal faces final committee stage as VAT changes are given go-ahead
The Bill containing the controversial plan to introduce a 15% levy on online bookie profits will go before a selection of MPs today for its final scrutiny before being passed into law.
The Finance Bill, which includes a range of proposed UK taxation changes, has reached the committee stage of the parliamentary process which offers MPs the chance to raise any concerns they may have over measures detailed within the Bill.
The committee commenced on Tuesday with further stages planned for today and again next week before the Bill is then passed on for its final reading.
Amendments to the planned introduction of a Point of Consumption tax for UK-facing offshore egaming operators are thought to be unlikely with the measure having previously enjoyed broad cross-party approval.
From December all online betting profits derived from UK-based customers will be subject to a 15% tax, the implementation of which is expected to have a major impact on the egaming industry.
The UK government has predicted the new tax will raise around £300m per year, but many believe the rate of the tax is too high and could have a detrimental impact on the industry.
The Remote Gambling Association has long argued for a rate set at no more than 10% with it having stated anything higher would likely stir the black market and see smaller operators struggle to stay afloat.
Susan Biddle, leading gaming lawyer and consultant at Pinsent Masons, said it was still unclear how the tax would impact the market.
“Only time will tell whether the new Point of Consumption basis for tax and regulation will have the intended consequences of raising revenue and improving consumer protection, or the unintended consequences of a larger black market and less market competition,” Biddle said.
Tuesday’s committee saw MPs discuss planned changes to customer VAT payments in relation to the suppliers of ‘digital services’, which are currently based on the rate where businesses are based.
From 1 January 2015, this is to be switched to a point of consumption basis so all UK customers will pay the UK rate no matter where the company they transact with is based, a move which could result in increased administrative costs for egaming businesses based outside of the UK.
“The change could increase administration costs for suppliers, as they are potentially liable to register and account for VAT in each member state where they have customers,” David Gauke, Exchequer secretary to the Treasury, said.
“The measures will ensure that there is a level playing field for businesses by ensuring that those located in countries with low VAT rates, such as Luxembourg, can no longer undercut UK-based businesses,” Gauke added.