New gambling regulations came into effect today in the UK, changing the tax due by operators from ‘place of supply’ to ‘place of consumption.’ Remote operators targeting UK players will no longer benefit from low overseas tax rates and each operator is now required to hold a licensed from the Gambling Commission.
Members of Parliament have been working on the bill since the start of the year, in order to close a loophole created by the previous government. Under the current Gambling Act of 2005, remote operators located overseas do not need a UK license and some of the largest operators, such as Ladbrokes and Betfair, relocated to tax-friendly jurisdictions, such as Gibraltar and Malta.
The tax reform will create a level playing field across the industry and will be enforced by tough enforcement measures, informed lawmakers. Failure to comply could result in the loss of the operator’s license, as well as prison sentences of up to seven years and unlimited fines.
“It is unacceptable that gambling companies can avoid UK taxes by moving offshore,” remarked Sajid Javid, Secretary of State for Culture, Media and Sport, “and the government is taking decisive action to ensure this can no longer happen. These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances.”
The point of consumption (POC) tax is a 15pc levy on gross profits imposed on all remote gambling operators targeting UK customers. The Gambling Commissions estimates that the UK gaming market is worth over £2bn (US$3.15bn) a year and today’s new regulations will bring in approximately £300m (US$475m) per year in additional tax revenues.
“Britain wants to have one of the competitive tax systems in the world,” proclaimed David Cameron earlier this year on the UK gaming industry. “Frankly, we are clearing up a situation that was put in place under the last government.”
UK Government – Website: Gov.uk
UK Gambling Commission – Website: GamblingCommission.gov.uk