Higher taxes for UK operators moved a step closer today after members of the Culture, Media and Sport Select Committee said they “approve the principle” of a draft bill to regulate the online industry based on location of consumer, not company.
In its report on its pre-legislative scrutiny of the Draft Gambling (Licensing & Advertising) Bill published today, the cross-party Select Committee concluded:
“Even the most vociferous opponents of legislation did not argue that the principle was wrong, or that they would refuse to apply for a UK licence - and there are several reasons why it should be so regulated.”
These included equity, consistency, as well as clarity and responsiveness to the needs of UK consumers, according to MPs.
The report also addressed the risks posed by a potential challenge to the law from “a disgruntled remote gambling operator or association”, ostensibly in reference to the Gibraltar Betting and Gaming Association’s threat to sue if the UK implemented its plans.
The Committee declared itself “satisfied” that the government had considered the compatibility of the proposals with EU law. “[W]e note its confidence that any challenge to the legislation would be unlikely to succeed,” it added.
This view was based on the government’s opinion to the European Scrutiny Committee that the proposals were “entirely consistent” with the policy framework outlined by the EC in its communication Towards A Comprehensive European Framework for Online Gambling, said the Committee.
The report was also dismissive of arguments over whether or not the government’s primary motivation for introducing the bill was to pave the way for HM Treasury to bring all UK-facing operators within the tax net, concluding that the scenario of all operators paying the same tax, regardless of where their online businesses were licensed and based, would be a “legitimate and desirable outcome”.
The Select Committee’s seal of approval follows the European Commission deciding not to extend its standstill on the draft bill last month, clearing the way for the government to forge ahead with its plan to issue licences for online gambling and tax all revenues generated by British consumers.
The Department for Culture, Media and Sport’s top civil servant Jonathan Stephens announced in early March that the UK could “commence new arrangements” for regulating remote gambling in Britain on a point-of-consumption basis as early as April 2014, ahead of the previously announced December 2014.
HM Treasury has however yet to confirm the accompanying tax level, however its modelling assumes a continuation of the present rate of 15% GPT. Following the offshore exodus to Gibraltar of Ladbrokes, William Hill, Betfair and Gala Coral in recent years, Bet365 now stands alone among the UK’s leading online operators in paying this duty, but has benefitted from double tax relief since April 2012.
Article written by Stephen Carter
