With the deregulation of the British gambling industry inching closer to reality, the Interactive Gaming, Gambling and Betting Association (iGGBA) is imploring the U.K. government to keep gambling taxes in check with those of other worldwide jurisdictions. The association made its case in a position paper submitted Thursday.
The 11-page report urges the government to take a low-tax approach with its new regulations and standards to ensure that companies will be attracted to the United Kingdom and not offshore jurisdictions where tax rates are lower.
It was submitted in response to a memorandum from the U.K. Treasury to the joint scrutiny committee in June suggesting that the government consider a higher tax rate for the gambling industry than what was suggested during the review of gambling laws.
Officials with iGGBA are slated to meet with the Treasury as well as Customs and Excise in the coming months to discus a future taxation regime that will be suitable for remote gambling operators.
Forthcoming policy changes have attracted the interest of foreign companies, particularly U.S.-based casino operators. Most experts agree that England will shift from its current restrictive gambling policies to laws comparable to those in Nevada. The overhaul is also expected to open up the interactive gaming industry in the U.K. market as well.
iGGBA Chairman Andrew Tottenham warned that if the government gets greedy with its tax structure, companies looking to expand in the United Kingdom will go elsewhere.
"The U.K. will only be able to attract foreign remote gambling business if its tax rates are globally competitive," Tottenham said. "More importantly, it is critical to offer U.K. consumers the choice of using a U.K.-licensed service which comes with strong social responsibility and consumer protection."
In addition to recommending for a competitive tax rate, iGGBA called for:
- A gross profit tax (GPT) as the preferred form of taxation;
- a clearer definition of GPT and how it would be applied to remote gambling services;
- a single rate of tax for the remote gambling license; and
- the application of tax on a country-of-origin basis.
In compiling its report, iGGBA looked at the market size, taxation and licensing regimes of other jurisdictions where remote gambling services are licensed and/or based.
Tottenham said the report also predicts the effect a 2 percent GPT regime would have on the industry and how remote gambling companies would respond to such a system.
"By highlighting successful regulation in other jurisdictions as well as examining errors that have been made, iGGBA believes that decision-makers here can learn from these examples," Tottenham said.
Click here to view the full iGGBA position statement.