A broadly discussed tax on freeplays and related discounts used by UK-facing online gambling operators to acquire and retain customers will be imposed as from August 1, 2017, despite previously being removed from the Finance Bill 2017, according to media reports from last week.
HM Revenue and Customs published late last year proposed changes to the way freeplays were treated in terms of taxation as part of the Finance Bill 2017. Said changes called for freeplays to be added when calculating licensed operators’ profit for the annual Remote Gaming Duty they were required to pay.
Under current laws, UK-facing operators can use bonuses to attract new players and motivate existing ones and these are not taxable. The UK Government explained that the status quo would be changed so that regulations were brought in line with the General Betting Duty, under which free bets have been subjected to taxation for some time now.
The original version of the Finance Bill was introduced in March 2017. In April, UK MPs removed the freeplays tax provisions, among a number of others, from the legislative piece, arguing that there was not sufficient time for those to be discussed properly in the weeks prior to the general election.
UK-based securities firm Cenkos Securities predicted back then that the freeplays proposal would be re-tacked onto the Finance Bill, in case the Conservative Party won the June 8 election.
According to the latest information released, certain parts of the original legislation will be re-introduced when the UK Government returns after its annual summer recess on September 5, while others will be amended. It seems that the freeplays tax provisions will be added to what would be considered by MPs as Finance (No. 2) Bill in they original form.
The new version of the bill is expected to be granted Royal Assent later in September or in October. The amended Remote Gaming Duty will thus be applied retroactively. In other words, a UK-licensed operator will be subjected to the new RGD as from its first three-month accounting period starting on August 1 or after that date.
This leaves gambling companies servicing UK-based players with less than a month to prepare for the new taxation regime. Major companies have previously voiced their discontent with the proposed changes, as these would burden them additionally. UK-facing gambling operators, no matter where they are based, have been paying a 15% Point of Consumption tax since December 2014.
According to the UK Government’s preliminary estimates, the amount of £345 million could be generated in the period between 2017 and 2021 as a result from the new taxation regime.
