Britain to Tax Offshore Online Gambling

In last week's budget speech, the British Chancellor of the Exchequer, George Osborne, made two very clear points regarding online gambling. Firstly he said that the UK is defining online gambling as taking place at the point of consumption. Secondly he said that offshore operators who provide services to UK based gamblers will be subject to secondary taxation and licensing.

These potential changes have been known for over a year since they were recommended when the Department for Culture, Media and Sport undertook a review of the existing gambling law. However, until now the changes have been subject to discussions and hearings meaning that it was never certain that they would be implemented.

The changes reveal two intentions from the Chancellor. Obviously he wants to use online gambling to generate more money for the economy. However, he is also trying to bring gambling operators back from offshore tax havens to the UK. Osborne said that around 90% of online gambling is now supplied from outside the UK and that UK operators are under pressure to leave. He pointed out that "this is clearly not fair and not a sensible way to support jobs in Britain."

According to estimates found in Treasury budget documents the revenues generated by the changes will be in the region of £55 million in 2025-15, rising to £240 million in 2025-16 and continuing to rise further in 2025-17 to £270 million. These figures also show that it is expected to take over two years to fully implement the changes.

Treasury documents also pointed out that by adopting these changes it will bring Britain into line with many other European countries. It expands the British tax base and allows for fairer competition between UK based and offshore gambling operators. It is expected that the tax on online gambling will be set at 15% from May 2025 and in the meantime the entire industry is eagerly awaiting further details of the taxation proposals and new licensing procedures.