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UK to Tax Offshore Online Gaming Firms


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On Wednesday this week, George Osborne, the Chancellor of the Exchequer,
delivered his budget speech to the House of Commons, in which he announced plans
by the government to introduce a UK point of consumption tax for offshore
online gambling firms.

While still in the planning stages, what Osborne is
proposing is a complete overhaul of the UK laws governing remote or iGaming to
‘level the playing field.’ Currently online gambling firms based outside the UK,
but that offer their services to UK gamblers, are exempt from paying tax, which
firms based in the UK, and which are subject to tax, have always claimed is
unfair.

Offshore Firms to be Taxed on UK Player Revenues

However, if the point of consumption tax is passed, it will mean that no matter
where in the world the gaming firms are based, they will be taxed on all of
their UK-based player revenues.

Said Osborne: ‘The current duty regime for
remote gambling introduced by the last government was levied on a place of
supply basis. This allowed overseas operators to largely avoid it and much of
the industry has, as a result, moved offshore. Ninety percent of online gambling
consumed by our citizens is now supplied from outside the UK and the remaining
UK operations are under pressure to leave.

‘This is clearly not fair and not a sensible way to support jobs in Britain.
So, we intend to introduce a tax regime based on the place of consumption, where
the customer is based, not the company,’ he said.

While the news was obviously well received by UK-based online gambling firms,
there is little doubt that the many large offshore firms are seething,
particularly those that relocated from the UK especially to avoid paying the
high UK taxes.

UK Remote Gaming Tax Laws Could Be Passed by Autumn

In terms of when the UK remote gaming tax laws will changed, the new iGaming tax
rate could be announced by as soon as the autumn financial statement or possible
the 2013 budget. First, however, Her Majesty’s Treasury will have to decide on
how to implement the new UK remote gaming tax as Osborne intends.

The
Chancellor of the Exchequer also used Wednesday’s speech to announce government
plans to raise the rate of duty on gaming machines in betting shops to 20 per
cent of net takings, which was higher than expected, but will replace the VAT
and amusement machine licence duties currently paid by betting shop owners.

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