Offshore Operators Face Facing £300 Tax Increase

Online gambling sites targeting players in the UK are facing new taxes and regulations that could cost them £300 million or more. During the past decade many remote gaming companies have relocated in tax havens like Gibraltar, Malta and others. Now the British Treasury plans to make offshore operators pay taxes on their profits derived from British gamblers. Currently Gibraltar is home to internet bingo operators, bookmakers and internet casinos. Companies that attempt to dodge the new tax regime face prison sentences of seven years and unlimited fines.

British bookies like William Hill, Ladbrokes and Gala Coral have relocated their internet operations to tax havens like Gibraltar. A recent report showed that almost 60% of all wagers originating in the UK were processed in Gibraltar. Gibraltar remote gaming companies pay a 1% tax while British operators currently pay a 15% gaming tax. Starting next year gaming companies that take wagers from players in the UK must pay gambling taxes on the profits from UK players even if they are located overseas. Depending on the type of gambling operators will have to pay remote gaming duty, general betting duty or pool betting duty. The current tax rate is 155.

Despite the new taxes many gaming companies say they will remain in Gibraltar because of the lack of taxes on advertising. One operator said that even with the new taxes the company will save over £30 million on advertising taxes. The changes go into effect on December 1st 2014. The UK Gambling Commission estimated that the British remote gaming market is worth over £2 billion annually. Treasury officials say the new taxes will generate approximately £300 annually in new tax revenues. The new tax regime will be supported by tough enforcement measures.

The new rules were created after a three month long consultation period. The government plans to tax gambling at the ‘point of consumption’ rather than a ‘place of supply.’ Culture Secretary Maria Miller will introduce a measure that will require all remote gaming companies doing business in the country to acquire a British gaming license. Officials say the license requirement will make sure that gambling operators that take wagers or advertise in the UK will make sure the companies participate in battling corruption in sports and provide funding to treat gambling addiction. Offshore operators say the new taxes are unfair but so far none have exited the British remote gaming market.