UK Gambling Tax Reform Hits – What it means for Players

UK Gambling Tax Reform Hits – What it means for Players is difficult to speculate about.  The new tax reforms could have wide ranging effects that may take a while to surface. Currently this new gambling law simply affects the gaming companies that have moved their operations offshore and are paying very low tax rates in their country of operation.

The new law is hoping to close the tax loop and have online gambling companies pay a fair tax rate on par with what online gambling companies based in the UK are currently paying. These increased tax rates should only affect the company profit margin and should not be passed on to the customers.

How Offshore Gambling Works

UK Gambling Tax Reform Hits – What it means for Players needs to be understood first by understanding how many online gambling companies operate. Online Casinos do not need the physical location that a standard live casino requires.

There is no need for a casino floor or bars or restaurants or any of the usual casino amenities. Instead the online casino exists virtually as software programs that run on servers. These servers are essentially a collection of computers that can be located anywhere in the world and accessed from anywhere n the world via the World Wide Web.

Because of this, online casino companies are not geographically limited as to where they can set up their company. So instead of basing their company in a country where there are high or average taxes on online gambling, they will instead base their company where online gambling is taxed very low or even poorly regulated.

For example, many companies are based in Gibraltar who only charges a 1% tax rate on online gambling. This 1% figure is capped at £425,000which means that online casino companies based in Gibraltar pay a maximum tax rate of £425,000 per year on all profits.

The Government Response to Offshore Gambling

UK Gambling Tax Reform Hits – What it means for Players currently is very little as the reforms mostly affect the company themselves. Since the old government regulation meant that companies are taxed on where they are located, or in other words they are taxed on their place of supply, and not on where their product is consumed.

Sajid Javid, Secretary of state for Culture, Media and Sport stated that it is unacceptable for gambling companies to avoid paying UK taxes by moving their operations offshore. With this new regulation, he said, the government is taking decisive action to ensure that these remote companies pay their fair share of the taxes

Tax Reform Effect on Players

UK Gambling Tax Reform Hits – What it means for Players at the moment is that they will not have access to some online casino companies who are closing their doors due to the higher tax rate.

This however does not mean much, as there are always legitimate online NZ casino sites out there that feature all your favourite games from all your favourite companies. The gambling tax reform simply makes the offshore gambling companies pay their fair share of taxes.