Just yesterday it was reported that Gibraltar officials are protesting the British government’s decision to impose a 15% gambling tax on British Gibraltar-based online casinos.
Now it has emerged that the UK government is going to impose the 15% tax rate on offshore gambling operators. This implies that the UK government is ignoring KPMG’s advice to impose a 10% tax rather than a 15% rate.
The new tax rule will come into effect in December 2014. From then on, gambling will be taxed according to where the player is based rather than where the operator is registered. In other words, gambling companies that service players living in the UK will be taxed according to the laws in the players’ jurisdiction and not according to the laws where they are based.
The Economic Secretary to the Treasury, Sajid Javid, said, “It is unacceptable that gambling companies can avoid UK taxes by moving offshore, and the Government is taking decisive action to ensure this can no longer happen. These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances.”
Technically, Gibraltar is governed by the United Kingdom. The Governor of Gibraltar represents the Queen of England. The Governor is responsible for day-to-day matters on the advice of the Gibraltar Parliament, but is responsible to the British Government in respect of defense, foreign policy, internal security and general good governance. Perhaps this is why the UK government believes it will be just to tax players in mainland Britain.
Currently the tax on online gambling operators in mainland Britain is 15%, and Gibraltar operators are taxed just 1%. The change will affect some of the biggest names in the online gambling industry such as Ladbrokes, William Hill, and Betfair who have operations in Gibraltar. At the moment those companies comply with the 1% tax rate. Furthermore, Gibraltar-based companies will now be required to have a British license in order to serve British clients.
Prime Minister David Cameron had announced in early August that a 15% tax on British residents who play on Gibraltar’s sites will be imposed. The issue is a long-standing one. At one point it was reported that Gibraltar would be joining the European Gaming and Betting Association (EGBA), also due to changes to the UK gambling tax regime.