Next year, the point-of-consumption tax for internet gaming may increase in the United Kingdom. The UK government is planning to do this in response tho those who have said the government needs to tax online casino companies more because they don’t pay enough. They also think they should pay more to help provide funding for treatment for those with gambling problems.
As of now, the point-of-consumption (POC) tax rate is 15% for internet gaming. Some see this move as a way to satisfy the critics who are unhappy that the cut to MAX stakes on betting terminals (fixed-odds ones) will not kick in until 2020.
Point-Of Consumption Taxes
The UK government introduced POC taxes in 2014, when the government decided that it would be a good way to tax British citizens for using internet casinos based elsewhere in the world, other than throughout the UK. Businesses affected includes sports-books websites and casino websites that have headquarters somewhere other than the UK, but still allow British citizens to use their services. There are some British companies that do business off-shores because it’s a way to pay lower taxes and to reduce their operating costs.
Why The Increase?
Critics are not happy with the timing of the increase. They have said that Treasury is worried about losing revenue that could impact its budget, which is the reason why the government wants to increase POC taxes. Critics have pointed out that research suggests that less revenue would be generated when betting limits on FOBT machines are lowered.
As of now, nobody knows when the FOBT decrease or the POC tax increase will happen. The Treasury did say mid-2019 is when they want try to raise the POC tax, while the FOBT decrease should happen in spring 2020.
Researchers believe that the extended roll-out is happening because the government wants to limit the impact on jobs and so betting shops won’t shut down. If this were to happen right away, the gaming industry as a whole could suffered and the unemployment rate could become worse. Gaming companies have said on numerous occasions that a decrease in revenue and increase in taxes may do great harm to their businesses.
Regardless of what the UK government decides to do, gaming companies might pass down additional costs of operating their businesses down to consumers. One way they may do this is raising the consumer tax on certain payouts, more specifically cash payouts.