Is the UK Government Setting the Trend for Online Gambling Taxation?

December 7, 2011

In the last few days, the UK Government has announced that it is going to start looking at the way it taxes overseas gambling sites. This follows the recent statement made by the Department of Culture, Media and Sport (CDMS) that it wishes to propose some changes to the way that overseas on-line gambling sites are regulated.

The major change which the DCMS is calling for is local regulation of remote gambling sites. Put simply, regardless of where the site is hosted around the globe, if UK players are using it, then it will need a UK gambling license. The UK Government quickly followed through with the statement that it intends to view on-line gambling taxation in the same way.

Although these two sweeping changes do not affect on-line gamblers at a personal level, this could well be the beginning of a more general reform on on-line gambling taxation which encompasses not only corporate taxation, but also personal taxation.

As on-line gamblers we all know that the whole concept of on-line gambling taxation is an extremely grey area. In some countries, assets accrued through gambling are not taxed at all, or are taxed at a reduced level. We are also aware of the fact that what the tax department doesn’t see, it doesn’t know about. How many of us have never benefited from the fact that the tax inspector seldom notices funds moved between on-line processors such as Neteller, PayPal and Moneybookers?

On-line gambling taxation is a complicated situation, and is dependent on a host of variables, not least of which are the local tax laws in the country you reside, which quite often clash with tax laws in the country where the on-line gambling site is hosted. Now that the UK Government is attempting to unify their approach to dealing with the actual offshore gambling sites, how long will it be before their eyes fall upon us, the on-line gamblers? And more importantly, how long before this begins to affect our pockets?

Every professional on-line gambler will no doubt have speculated on just how long it would be before Governments began to look more closely at the major loopholes which exist in on-line gambling taxation. It seems this question is now being answered.

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