Worth a punt

In its 2005 pre-Budget report the Treasury said the 2006 Budget would
announce rates of tax for remote gaming businesses that become UK licensed.

Not only did the 2006 Budget pass by with no mention of these rates but the
recent PBR also slipped by in silence on the matter.

This is a massive concern for those offshore gaming businesses currently
considering UK licensing for their remote gaming businesses.

As things stand, the benefits – and sanctions – under the Gambling Act 2005
are about to take full effect, yet businesses are still not able to properly
model the tax cost to their business of becoming UK licensed.

The government has stated that its aim is to create a regulatory framework
which will make the UK the licensing jurisdiction of choice for the remote
gaming sector.

We urge the Treasury to further consult with businesses and their advisers,
and take this opportunity to ensure that the UK tax environment, including
gaming duty, corporate tax and VAT, supports this aim.

Creating an attractive tax environment for remote gaming groups could prove
to be an incredibly important turning point for the UK economy.

E-commerce is now growing and developing at an exponential rate and remote
gaming business is, in a number of areas, leading this development.

If the government can get this right for remote gaming, it would put the UK
in pole position to attract other global e-commerce businesses.

Both industry and government agree that e-commerce will continue to grow
rapidly. It is estimated that the value of UK online spending in December alone
was in the region of £3.7bn – a 45% increase on December 2005. Such a
significant and growing field of business demands a globally competitive tax

We are currently seeing companies with more ‘traditional’ business models
basing their headquarters away from the UK, citing tax complexity and a higher
tax burden (Google and Kraft to name two).

For online businesses that can be more flexible with their location, the lure
of credible regulation must go hand in hand with an internationally competitive
tax regime.

Without this, not only will gaming companies come to the UK, but related
sports betting businesses, currently based in the UK, will migrate overseas.

Paul Eagland is head of tax at BDO Stoy Hayward

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