In an attempt to prevent online gambling companies from moving offshore to avoid paying taxes, Britain has levied a new tax on those sites based on where their users are located as opposed to the location of the gambling companies. The new tax is set at 15%, same as domestic online gambling companies, and will generate about 300 million pounds per year. The new tax is said to take effect in December of 2014.
Sajid Javid, Economic Secretary to the Treasury, is quoted in a Sky News article as saying, “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.”
He went on to say, “These reforms will ensure that remote gambling operators who have UK customers make a fair contribution to the public finances.”
Sky News points to the companies that may be hardest hit by this new tax, like Ladbroke and Betfair, who are “based in Gibraltar, where taxes are levied at 1% and capped at £425,000.”
A failure to adhere to the new tax, as the DailyMail notes, could lead to steep fines, a max of seven years in prison, and the possibility of losing their remote gambling operator’s licence.
Stay tuned to see if more governments follow suit with similar taxes.
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