Upcoming Changes to the UK’s Online Gambling PolicyOne of the biggest issues in regards to online gambling in 2012 is the situation of the online gambling tax regime of the United Kingdom. The UK has always been known as one of the most progressive jurisdictions when it comes to online gambling but it appears this might change if politicians manage to adopt a controversial legislation. At this moment online gambling companies not located in the UK are able to offer their services to UK players without a UK license (in case they are licensed in other countries) and not having to pay UK taxes. If this rule would be changed it would turn the UK online gambling market upside down.
UK has one of the most progressive online gambling laws on the globeAt this moment all forms of online gambling are completely legal in the UK. There are no restrictions at all regarding which games people are allowed to play, how much they can wager or how long they can play. The only condition is to be of 18 years old. It’s also very easy for operators to receive a legal permission to provide online gambling services. The only thing operators have to do in order to acquire a license is to offer fair games and a completely safe gaming environment. Now, here comes the most important aspect that makes the UK gambling law so progressive: It doesn’t require offshore online gambling operators to apply for a genuine UK license in order to provide services in the country. In other words, every online gambling operator that has a license in so-called “white-listed” jurisdictions is allowed to offer online gambling services in the UK by default and tax free.
All this is now to change with the new online gambling taxation proposalEarlier this year a number of UK politicians commented that they would like to see this policy changed. They argue that this policy does not help the UK at all because almost every single UK operator is now located in offshore jurisdictions in order to avoid having to pay taxes. While the arguments raised are valid, the problem with this proposal is that it will try to impose a 15% taxation regime on offshore operators. The 15% profit tax is the same tax rate that has to be paid by UK-based on online gambling companies (i.e. pretty much no one at this moment). The 15% tax was introduced in 2001 when politicians believed that they would generate huge amounts of money by increasing the old tax of 6.75%. This however led to almost 90% of the UK’s online gambling companies leaving the country.
Why the new tax proposal could be a big failure and what are the alternatives?The government is correct with the proposition that offshore gambling companies should pay UK taxes as well. – pretty much everyone agrees with this. But the new plan pursued by the UK will be a huge fail if it will be adopted in its current form. The whole fiasco of online gambling companies leaving the UK actually began with the country increasing its online gambling tax to 15%. Further pushing and forcing the 15% policy would actually worsen the situation. One of the biggest downsides of this proposal could be that online gambling operators would refuse to pay the tax and continue to operate outside of the law. This would basically mean that UK players would be forced to play at unlicensed online gambling sites. In reality this could massively damage the UK online gambling market, generate even less revenues and could reduce the diversity of services available in the country.
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