New UK Internet Gambling Tax Supported by DCMS

The Select Committee for the Department of Culture, Media and Sport (DCMS) confirms it support for the UK government's proposed tax regime on Internet gambling.

The DCNS has just published a report on the regulatory "point of consumption" taxation proposal by the government. While the committee supports this form of tax system, it urges caution against setting the tax rate too high in case it drives both companies and their customers away from the regulated i-gaming market.

Online Gambling Report

The report is entitled the "Pre-legislative Scrutiny of the Draft Gambling (Licensing and Advertising) Bill" where it is stated that the committee is in favour of the kind of point of consumption tax proposed along with the secondary licensing and taxation for Internet gambling operators that are operating within the UK market.

In the report, it is explained that currently, as much as 80 percent of all gambling done online in the UK is conducted using operators not licensed in the UK. It sets out how the government has introduced the latest draft of its new gambling bill which sets out the requirement for operators based overseas to apply for and obtain the necessary Gambling Commission license before they will be allowed to provide their services to consumers in the UK.

The report includes the statement, "We support the principle that gambling should be regulated on a 'point of consumption' basis: where the consumer is," and goes on to state, "We note the concerns raised about taxation of the online industry. The Government stated that the ability to bring all operators serving UK consumers within the tax net is a consequence, but not the prime motivation, of the draft legislation."

New UK Gambling Tax Enforcement

In the report, it is also stated that the government as well as the Gambling Commission have made assurances that the Commission will possess all the necessary tools to enforce the new tax regime effectively. The DCMS was told the additional income that is to be expected to be produced from this licensing regime will be sufficient to cover the costs of enforcement, meaning there will be no need to increase the license fees themselves, making the process self-funding.

The DCMS writes, "We intend to monitor these areas." If this means they will keep a close watch on how this change is implemented and its effects on the market, we can expect a smooth transition assuming the operators involved are willing to accept the changes and work with the government.

Note: The UK online gambling tax report was originally published on 1st May by the House of Commons appointed committee. This committee is chaired by John Whittingdale, (MP for Maldon).