The U.K. government is planning upsurge the consumption tax for online gaming early next year. This is as a response to critics who opted that the United Kingdom needs to impose more tax on the gaming companies.
The main aim of increasing the tax is to be able to pay for the treatment of gamblers issues. It will also satisfy the ones who believe that gaming companies don’t pay enough taxes. Formerly, the POC tax rate for online gaming is 15%. The increment is somehow seen as a way to placate the critics who are not happy that maximum stakes on fixed-odds betting terminals will not be there in 2019
The very first time when the Point-of-consumption taxes were introduced in the United Kingdom was in 2014. This is when the British government came up with the idea of taxing British citizens who use online casinos and are not in their areas but still receive some revenue from the games. This includes all the casino websites as well as sportsbook websites even if their headquarters is suited elsewhere.
Some British firms choose to do business somewhere off-island so as to keep their operating costs low and also pay low taxes. After the rise of the government need to raise the POC tax, some online gaming firms have complained that increase in tax will cause them to raise prices for their items as well as comp limits which in return lowers their profit.
For quite some time, the British government has been criticized for timing the increase of POC. However, according to the critics, United Kingdom opted to raise the POC taxes since the treasury bonds were worried, a loss of revenue would affect the entire budget. More so, the research shows that lowering the betting limits on FOBT machines would lower the entire revenue.
Increasing the FOBT rate to a $5 supreme bet from $132 maximum bet signifies a vast funding gap. Moreover, the treasury concern on the drop-in revenue, but gaming companies are arguing that they will be hit twice. One is by reducing the revenue from the FOBT machines and the second is from increasing the POC tax. Right now, there are timeline limits are either the POC tax increment or FOBT decrease.
The Treasury said that it will focus on implementing the POC tax increase come next year. And by April 2020, it wants to decrease FOBT. Nonetheless, according to the Economic researcher’s part of the motive for the extended rollout is that the government wants to lower the gambling industry impact. In return, this will create a chilling effect on the gaming industry as well as redundancy rate and the British budget.
Gambling firms have already cleared that an increase in taxes and a reduction in revenue have a great potential to disrupt their businesses. According to the British government, their plan is going to push through and the gaming establishments are likely to pass the operation cost. This will include taxes will run down to their customers.
The tax may be passed down in the form of consumer tax or cash outs. Even though the decrease of in the maximum bets on FOBT has been a great debate topic in the UK the upcoming change may on the online gambling taxation may be great issues for the players.