The UK’s Remote Gambling Association (RGA) has called for Britain’s online gambling tax proposals to be changed following a report by financial services firm KPMG.
In its 2012 Budget, the UK government announced plans to tax online gambling on a “place of consumption” basis, and last month the government confirmed that it intends to impose a 15% tax rate on online betting companies that target customers in the country but are based in offshore tax havens.
However, according to the RGA, which commissioned the study, the KPMG report found that the proposed tax is “likely to fail to achieve its aims” unless the rate of gross profits tax does not exceed 10% and allowances are made for companies to offset costs associated with bonuses and incentives.
The report said that the immediate implementation of the proposal could lead to firms being unable to recover their costs and a large number of UK customers switching to gambling products from duty-avoiding providers because they are able to offer lower prices.
“If either of these come to pass, then it may be difficult to reverse these consequences with a subsequent reduction in the tax rate,” the report said.
“It is vitally important that the Government does not repeat past mistakes,” RGA chief executive officer Clive Hawksgood said. “It needs instead to set rates of remote gaming and betting taxation that give operators a realistic chance of being competitive in what is an inherently international market.
“This is a challenging time for the industry and we will continue to engage with Treasury to ensure the impact of any tax changes is fully understood by the Government.
“The online gambling industry is a UK success story and already contributes significantly to UK Plc in terms of jobs, marketing spend and corporate taxes. We do not want to see the Government’s plans put these companies and their investments in jeopardy.
“We argue strongly that any rate above 10% GPT is not sustainable in what is a very mature market where consumers already know what level of value and choice to expect.
“In two reports, Parliament’s Culture, Media & Sport Select Committee has already urged the government to get the tax regime right and it is in the interests of all concerned that HM Treasury takes note of that and all of the evidence which points to a sustainable rate being no higher than 10%.”