UK Treasury announces 15% remote gaming tax rate
New tax on gross gaming revenues from UK customers set at 15% and will come into force in December 2014
UK-facing egaming firms will be subject to a 15% tax on all remote gaming revenues from UK customers from 1 December 2014 under new draft regulations announced by the UK Treasury.
The Gambling Commission estimates the UK remote gambling market is worth over £2bn per year and says the new rules will attract around £300m per year in additional tax revenues.
The new laws will impact the entire UK-facing industry through the introduction of GPT on online gaming revenues, but will hit firms who have moved their online sportsbook operations offshore, such as William Hill, Coral and Ladbrokes, hardest.
UK-based firms, such as bet365 and Sky Bet, currently pay Gross Profits Tax of 15% on all sportsbook revenues compared to Gibraltar where gross profits are levied at 1% and capped at £425,000.
“It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the Government is taking decisive action to ensure this can no longer happen,” Economic Secretary to the Treasury Sajid Javid said.
The announcement from the Treasury follows a three-month public consultation period, and complements a previous amendment to the Gambling Act from the Department of Culture Media and Sport requiring all operators to have a UK licence to enable them to transact with British consumers and to advertise in Great Britain.
Currently operators licensed in white-listed territories, Gibraltar or the European Union can freely advertise into and take bets from the UK.
Failure to comply with the new guidelines could result in prison sentences of up to seven years, unlimited fines, or the loss of a remote gambling operator’s licence, the Commission said in a statement.
The news could be followed by a legal challenge from operators who believe the rate is unworkable. Last year the Gibraltar Betting and Gaming Association (GBGA) raised half a million pounds in preparation to fight the UK government’s plans to impose the 15%.
eGaming Review reported in May 2012 that 23 out of the 24 members of the GBGA each paid an average of £22,000 to hire two experienced QCs to prepare a legal case that will aim to either stall or preferably abolish the coalition’s bid to tax UK-licensed operators at the point of consumption instead of the current point of supply.