As of December 2014, a gambling tax of 15% will be imposed upon online casino operations used by consumers in the UK, even when these UK companies have moved their bases offshore.
The new tax law states that gambling needs to be taxed based on where the customers using the services are located, not necessarily where the registration of the online casino has taken place.
Sajid Javid, Economic Secretary to the Treasury, was quoted saying that it is “unacceptable” for gambling companies to be able to avoid UK taxation by moving their operations offshore. Javid said that the government is “taking decisive action” to ensure these practices are a trend of the past.
Javid also stated that these new tax reforms will make it so online and remote gambling operators begin to contribute tax dollars towards public finances in the UK.
The new 15% tax rate will bring an extra £300 million per year in revenue to the government, as the offshore based internet gambling operators will begin paying the same tax rate as those on domestic shores.
The plans were originally drafted in the 2012 Budget, however, those who would be affected by the new taxation were waiting to hear further details including when it would be implemented and most importantly, the tax rate they would be paying.
According to the Gambling Commission, 2012 brought in a GGY, gross gambling yield, of £21.08 billion, a 5% increase from 2011, excluding bets made via the telephone. The UK GGY has grown 1% on its own from 2011-2012.
Operators such as Bwin.party, William Hill, and Ladbrokes, all companies that are based in Gibraltar, have been paying a 1% tax rate with a maximum cap of £425,000. These new tax rules could have a major impact on these and other offshore based online gambling. the changes will be ideal for the UK government, as the Gambling Commission released that online operators licensed in Britain make up 4% of the world-wide GGY total.
Sky News, “Online Gambling Firms To Pay 15% Tax In UK”; 3:28pm UK, Friday 16 August 2013 http://news.sky.com/story/1129538/online-gambling-firms-to-pay-15-percent-tax-in-uk