Secondary licensing taxation confirmed

Media reports over the weekend that the British government is to consider the tax implications of secondary licensing for offshore betting companies wishing to access the UK market were confirmed Monday by a Treasury official.
Economic Secretary to the Treasury, Justine Greening, announced: “I will review the case for changing the taxation regime in line with [gambling policy minister] John Penrose’s proposal and taxing operators on the basis of customer location [rather than supplier location]”.
Greening added that in tandem with the review she would also consider the implications of other countries’ rules to try to prevent UK operators being taxed twice.
Analysts speculating on the introduction of tax estimate it could possibly lead to a hit of up to around GBP30 million pounds a year to the larger operators such as William Hill, Ladbrokes and Betfair, all of which moved their online divisions offshore to take advantage of more benevolent taxation regimes in alternative EU jurisdictions like the Isle of Man and Gibraltar.
A spokesman for William Hill plc said in a statement Monday that it would work closely with the government “to ensure that the review fully takes into account the commercial impact of any change before any decisions are made”.
The chief online gambling regulator on the Isle of Man, Garth Kimber, reacted to the news by commenting that the UK government’s secondary licensing plans should not be seen as a threat.
He drew attention to minister Penrose’s comments last week that those offshore-based businesses in trusted ‘white-listed’ jurisdictions such as the Isle of Man would have the benefit of a much ‘lighter touch’ from UK Gambling Commission inspectors.
Kimber added that there would be no duplication of regulation, and that the IOM Gambling Supervision Commission will remain the primary regulators for Isle of Man-based operators.
The regulator also expressed the opinion that the secondary licensing moves in the UK were not linked to the ‘Black Friday’ swoop by the FBI on three online gambling companies, including the founders of island-based PokerStars.
“This [secondary licence issue] was raised long before. What set it off was the level of problem gambling. They found a lot of sites were on jurisdictions which were not white-listed. This is not an attack on us,” Kimber emphasised.
The island’s e-gaming industry brings in about GBP4.2 million in revenue from players from around the world.
IOM Economic Development Minister Allan Bell MHK said: “In my recent conversation with Minister Penrose I received assurances that the UK Gambling Commission has no wish to duplicate the work that our Gambling Commission does in regulating our operators.
“It has been clear from my representations on behalf of Isle of Man operators that these provisions are a direct recognition of the confidence the UK has in our high standards.”

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