The UK government has decided that tax of gambling firms will be changed from the current basis where firms based in the UK pay tax (place of supply based) to a system where firms will pay tax on the place of consumption so they pay on earnings from UK players wether the firm is in the UK or not. UK based firms would not be taxed on earnings from overseas players.
They have a live consultation on this which is available here:
IMHO UK players should feed into this consultation, plus of course interested suppliers.
Many may wish to stop here as I am now going to get into some of the detail on the questions, asking for feedback and comments.
Under a place of consumption basis of taxation, operators will pay tax on gross gambling profits (the difference between stakes and winnings when gambling against the operator or the charge for using gambling facilities when gambling against other customers) generated from customers in the UK, no matter where in the world the operator itself is located.
In general this is good news as the regime envisaged would allow foreign based firms to operate here, should make being based in the UK more attractive and there is nothing directly in the proposals to prevent international player pools. The impact assessment though is based upon a 15% levy which is pretty chunky.
Anyway to the questions that we may want to comment upon:
Question 2: What, if any, specific gambling products (other than those discussed in this consultation document) need special consideration in regards to a move to a place of consumption basis of taxation?
Here I think we could comment upon very large MTTs and the need for international player pools to sustain them, plus of course the need for liquidity for ring game choice for the customer.
The difficulty being that the provider pays different tax rates by location of player. This may not seem like much but as the proposal only really discusses poker in three paragraphs there may be probs:
3.20 For person to person games, such as poker, the basis of remote gaming duty will be the amount that is paid by people in the UK as entitlement to use facilities. For example, where a payment is made to a provider of facilities from a centrally held ‘pot’, the provider of facilities
will be liable to duty on the proportion of the payment due from customers in the UK. Where a payment is made from an individual player (e.g. the winning player) the provider will be liable to duty if that player is in the UK.
3.21 Where more than one person is engaged in the provision of gaming (e.g. when a provider subscribes to a poker network), the provider will be responsible for the remote gaming duty on all deductions attributable to its UK players whether they are made by the poker network or by the provider themselves.
5.2 The remote gambling market is relatively young. Gross gambling profits generated from transactions with UK customers have grown significantly in recent years as the market has expanded and developed. Different parts of the market have different characteristics. One important distinction is between betting products and gaming products (such as casino games, bingo and poker).
Immediate thoughts that occur to me is that there is a big split between tourmnament and cash in these terms.
For tournies the payment should be clear and from the individual player, paid before the cards fly and so tax due on entry not on winning. This might allow suppliers to discriminate against UK players and charge us more (to cover the extra tax bill). IMHO this should be banned as a condition of being allowed to provide the service in the UK.
The cash games seem to be different by viewing the service payment as being solely paid by the winner of the pot (rake) this provides a perverse incentive for a site to have the non Brit win the pot! Now clearly only a dishonest site would alter the outcome to have a more profitable player win but the tax is creating the incentive. Bizarely the sites would have an incentive to dump winning UK players in favour of losers.
In additon any VIP scheme or rakeback scheme that uses the fairly sensible contributed rake measure is made much more difficult to operate if the nationality of the winning player effects the sites profits. This might mean lower rakeback/VIP for UK players and might jeopardise the incentive schemes overall as the value paid back is still getting taxed.
Some help on if these concerns are real issues and how to express them would be gratefully received....anyway the VIP scheme might be one product to raise under question 2.
Question 3: Other countries have moved, or are considering moving, to taxing remote gambling on a place of consumption basis. What, if any, lessons from your experience in providing remote gambling to customers in other countries should the UK take into account?
Here is where we should be slagging off Italy/France and whoever else has stopped access to international player pools. Is it still just Italy and France plus Sweden's state monopoly?
Essentially PLEASE HELP on question 3!!!!
Question 4: It is proposed that operators will have to take reasonable steps to determine the location of their customers. (i) Do you agree with a ‘reasonableness test’ approach? If not, what alternative solutions would you propose? (ii) Are there any products for which an operator would be unable to make a reasonable attempt to determine whether the customer was in the UK or where it would be unclear when a bet was made or when the facilities were used?
The reasonableness they suggest is this:
3.7 The type of indicator that an operator is expected to use to determine whether a customer is in the UK may include:
• instantaneous tracking technologies (such as IP address tracking, geo-location software on smartphones, mobile phone network etc.);
• verification of customer address or registered payment address as part of “Know Your Customer” arrangements; and
I hate the civil liberty implications of geolocation so would advocate know your customer as fine, with customer decleration but making it so that there is no incentive for the customer to lie/deceive about the country they are in.
Finally for those who got this far here is a good reason why you should reply here and/or submit to the consultation. They say the impact is this:
The impact on individuals and households is expected to be negligible as this measure is not expected to have a significant impact on the availability, price and payouts of remote gambling. Further evidence is being sought in this area.
Impact on business including civil society organisations
The majority of operators offering remote gambling to customers in the UK are based abroad. These companies will become liable to UK duty and consequently face an increase in their administrative burdens and tax liabilities. If these companies are located in a jurisdiction that taxes on a place of supply basis, they will face double taxation.
The gambling duties that operators based in the UK currently pay will be changed to a place of consumption basis. This is not expected to result in an increased administrative burden as no new duty is being introduced. Operators based in the UK will no longer pay duty in respect of gross gambling profits generated from non-UK customers.
More evidence is being sought on how this change will impact business.
They project the tax impact as
This is from firms but we need to see how to stop that bill falling straight onto us so help me to complete a consultation and maybe do one yourself.
Soz its so long.