UK Government Set 15% Tax Rate on iGaming Operations

iGaming operators targeting the UK gambling market are set to be imposed a 15% gambling tax rate. The new set of gaming tax laws state that from December 2014 gambling tax will be set according to where the customer wagers rather than where the online operator is operationally registered. The purposed 15% tax rate on gaming revenues is set to be outlined and proposed in the upcoming in the UK 2014 March Budget Statement.

Currently companies that operate in offshore financial centres such as Malta, Gibraltar and the Isle of Mann will be charged the same level of Tax duty as domestic gambling firms. Currently firms such as Ladbrokes, Bwin.party, William Hill and Betfair all have online operations based in Gibraltar, where taxes are levied at 1% and capped at £425,000.

Igaming operators have been preparing themselves for these imposed changes, since the proposition to bring offshore gaming companies under the UK tax system were outlined in the 2012 Budget. Companies operating in the UK market have been waiting for further information on the rate of tax, where the tax will function and be applied and how the tax will be monitored by the UK government. The UK Treasury department will announce the publication of a full detailed plan on the Taxation of Gambling in the UK.

A study by the UK Gambling Commission stated that the proposed tax set for 2014 is set to generate the UK government a potential £300m a year in tax revenues. Currently the UK igaming market is valued at 21.08bn during 2012, up 5% on the previous year. The study also stated that the UK igaming market currently equates 4% of total global gaming revenues.

The proposed tax on UK gambling has been met with mixed reaction by the industry, William Hill who are currently the UK’s has suggested that it could challenge the tax proposition on grounds that it is set against European Union anti-competition laws. Gibraltar and Malta governments have also stated their frustration at the proposed tax bill,stating that it would effect one of their countries key industries.

The bill is set to police taxation with tough sanctions for those who do not follow suite – “Failure to comply with them could result in prison sentences of up to seven years, unlimited fines, or the loss of a remote gambling operator’s licence to operate,” commented Economic Secretary to the Treasury Sajid Javid