UK Government to Address Tax Inequalities of Offshore Gaming Companies

Many in the UK government think it is time for offshore gaming operators to pay their fair share in taxes. Many gaming companies targeting the UK online gaming audience are licensed in Gibraltar, Malta and across Europe to avoid the heavy tax burden imposed on internet gaming operators licensed in the UK. Online gaming sites including online bingo sites in the UK are regulated by the nation’s Gambling Commission and must meet strict standards of conduct.  Governments everywhere are struggling with massive deficits and are looking for new revenue streams and the UK government is taking a second look at offshore gaming companies.

While UK bingo clubs and casinos are suffering from the lingering effects of the recession the additional tax burden has caused many to close putting thousands out of work. Many in the UK gaming industry believe that if offshore operations were taxed and regulated by the gaming commission that gaming companies licensed in the UKI could see a reduction in taxes. News sources say that the new coalition government is taking a look at offshore operators. Recently gaming operator Betfair moved part of their operations to Gibraltar to avoid paying heavy UK taxes. The typical tax burden for gaming operators in the UK is about 15% in gross profits taxes. If that same company was located in Gibraltar the taxes would only be 1%. While it is easy to understand why Betfair moved part of their operations offshore gaming companies licensed in the UK are crying foul.

Bingo sites licensed in Gibraltar are allowed to advertise in the UK because Gibraltar is on the UK’s ‘white list’ of approved licensing jurisdictions. Some proposals in Parliament would require all gaming operators advertising in the UK to be licensed and regulated by the UK Gambling Commission. Companies regulated by the Gambling Commission would also be subject to UK taxation. UK gaming companies say that allowing offshore gaming sites to avoid taxation puts them at a competitive disadvantage. Last year UK punters spent £2.5 billion pounds on telephone and internet gambling and gaming operators licensed in the UK represented less than 25% of all gaming transactions.

Currently Culture Secretary, Jeremy Hunt is reviewing legislation that would require all online gaming companies doing business in the UK to be licensed by the Gambling Commission. Online bingo sites are included in the proposed legislation. UK gaming companies say it is about time that the government addressed the tax inequalities between UK and offshore gaming companies.

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