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UK Confirms Gambling Tax Changes

by Jason Gorringe,, London

27 March 2012

Offshore gambling firms have been dealt a blow in the United Kingdom's latest Budget which amends the tax rules applicable to the supply of gambling services to the UK market. Wagers will now be taxed on a point-of-consumption basis, bringing offshore operators under the UK tax net.

Proposals to carry out the change were previously announced by UK Minister for Tourism and Heritage, John Penrose on July 14, 2011, after a review of the UK gambling regime, aimed at levelling the playing field between UK-based companies and their offshore competitors, as well as to generate fresh revenues for UK coffers.

Following the departure of several UK gambling companies to offshore locations such as Gibraltar in recent years, lured by a significantly lower taxes, the government has estimated that 90% of online gambling services are now supplied to the UK market from overseas territories.

The change will mean that any wagers taken in the United Kingdom, whether supplied by an overseas operator or not, will be subject to UK gambling levies. Government projections anticipate that the decision will boost revenues by GBP55m (USD88m) in 2014-15, ramping up to GBP270m by 2016-17.

"The current taxation regime for remote gambling has allowed operators to avoid paying UK gambling duties by basing their operations abroad," the Budget report states. "To broaden the tax base and provide a fairer basis for competition between UK and overseas remote gambling operators, Budget 2012 announces that the government will move to a tax regime that ensures operators anywhere in the world pay gambling duties on gross profits generated from customers based in the UK. This is in line with the actions of several other European countries."

William Hill, one of the operators that recently joined the tax exodus to Gibraltar, said it would maintain its partial tax residence in Gibraltar because of the tax benefits available when supplying services to other jurisdictions.

A comprehensive report in our Intelligence Report series examining the new possibilities that offshore e-commerce open up for business, and analysing the offshore jurisdictions that have led the way in offering professional e-commerce regimes for international business, with a particular focus on e-gaming, is available in the Lowtax Library at and a description of the report can be seen at
TAGS: tax | business | Gibraltar | commerce | offshore e-commerce | international financial centres (IFC) | United Kingdom | offshore | internet | e-commerce | gambling | offshore e-gaming

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