While the majority of reaction from this year’s budget centered on the cut in income tax on line gaming operators in the U.K have been reacting to a new tax rate of 15% imposed by the Chancellor Gordon Brown.
The new flat rate of tax has been welcomed by some but condemned by others within the industry.
The Remote Gaming Duty proposal is disappointingly higher than hoped for by some companies that had hankered for a nominal 3% or less to encourage the majority of the offshore gaming companies to obtain a UK licence.
However, 15% is unlikely to be competitive with the rates in the tax havens where many are based and to persuade companies to go to the trouble of relocating businesses and staff to the UK.
The decision by the exchequer to choose such a rate may have been initiated by a type of self-protectionist policy as American companies in particular seek to relocate on this side of the Atlantic.
The 15% flat rate is very competitive compared to the standard gaming duties currently paid by UK-based casinos and other operators of gaming services that are not "remote gaming" services.
The Remote Gaming Duty, as proposed will affect anyone involved in the "provision of remote gaming". It will be introduced as a new duty of excise on the gaming profits of remote gaming operators. Remote gaming is described by the UK Government as playing a game of chance for a prize by the use of media such as the internet, telephone or television.
The likelihood is for the measure to become law at the same time as the new Gambling Act 2005, on 1st September 2007.
At the moment gaming duties in the UK are applied to casino operators based on Gross Gaming Yield (GGY). The rates and bandings for this tax are also to be changed but in general terms the UK casino companies affected will pay from 15% up to 50% in tax rates as profits increase.
The top rate is payable on GGY above approximately £10,000,000. The 50% rate is a new higher rate (40% was in place before now) and will no doubt apply to the profits of the new "super-casino" that is to be built in Manchester as well as other venues.
With online gambling in the UK increasing in popularity by the week the British exchequer will be expecting major increased revenues to boost the nation’s coffers.
