Speculation Grows On Remote Gaming Tax

Published: Wednesday, March 21, 2007 Online-Casinos.com

REMOTE GAMING TAX SPECULATION GROWS

Online Gambling Groups keenly anticipate today's Budget Speech

On the run-up to what is possibly British Chancellor Gordon Brown's last budget speech today (Wednesday) speculation is again rife on whether he will finally commit to a remote gaming taxation rate, enabling gambling managements to decide whether licensing under the reformed British gambling laws is sufficiently attractive to move to the UK.

Reuters reports that the betting and gaming industry expects Brown to impose a number of tax changes when he delivers his budget speech in London. Analysts say Brown will try to tempt online casino gaming firms like PartyGaming and 888.com, currently based in offshore tax havens such as Gibraltar, the Isle of Man and Cyprus, back to Britain and within reach of the UK tax man with a new, low Remote Gaming Duty.

Reuters claims that expectations for the new tax rate range between 2 and 15 percent of revenue, although companies will also have to take into account the tax implications of paying their staff if they relocate back to Britain. Speculation earlier this week has hinted at a tax rate calculated only on revenues from British gambling action, but there has thus far been no official and public confirmation of what the government's final decision will be.

One gaming executive, who asked not to be named, told Reuters that firms would jump at the chance to move if the tax rate was right and if they thought the UK government would back them up as they look to overcome opposition to online gaming in other countries.

However, Betfair Managing Director Mark Davies told a recent conference online firms with well-known and reputable brands would not feel a UK domicile was necessary to prove their respectability and would need a bigger carrot.

The move could also upset traditional bricks and mortar casino operators, whose profits can currently be taxed by as much as 40 percent.

In terms of the reforms, the Gambling Act which comes into force in September this year allows more and larger land casinos - the smallest of the planned casinos are four times bigger than most existing ones and duty payments for [land] casinos operating under new licenses are expected to rise significantly. Potential operators will also want clarification before they decide whether to submit bids to run the new casinos.

Traditional players could see the field leveled further if Brown decides to impose VAT on Web sites where players play against one another, such as poker.

Bricks and mortar casinos and bingo firms already pay standard VAT on the fee they charge gamblers to play and although remote gaming sites also charge for participation, these fees are currently not taxed.

"This change could cause a number of operators to reconsider where they base their operations, with many considering a move to low-tax EU jurisdictions such as Malta to benefit from EU VAT rules," said Richard Dalton, a VAT specialist at accountancy firm Deloitte.