Gambling is a huge tax generator for governments as the billions generated are a vital source of income for funding many social projects .The tax rates have been a hot topic as we reported last year and many critics believe that the government is loosing billions to offshore operators. Tax havens like Gibraltar are used by UK based gaming companies to legally avoid paying a higher rate of tax. This topic has come back into the spotlight with a report from The Independent. According to their report the UK government is losing about £1 billion in taxes from bets taken online or remotely by British gamblers.

The current legal situation allows major Bookmakers like William Hill and Ladbrokes to enjoy a preferred tax rate in tax havens like Gibraltar. Offshore operators only need pay about 1% in taxes while UK operators need to pay 15%. Since 2009 the estimate is that over £1 billion in tax revenues has been saved by the top 10 operators in remote gambling.

The tactic of utilizing offshore tax havens is not only exclusive to gambling. Recently Amazon and Starbucks came under fire for using tax havens like Switzerland and Luxembourg in order to save tens of millions of pounds.

The government is set to change the legal loophole some time in 2014 as they need to be competitive with offshore operators. British bookmakers like William Hill and Ladbrokes have saved over £37 million and £18 million respectively as a result of routing their remote gambling offshore.

The same bookmakers are also aware of the fact that they will come under public scrutiny from the public when these types of numbers are made public. With everyone feeling the pinch in the economy the government will have to do some “explaining” on how they have allowed almost a billion pounds to go out of the country in the last few years. It is in the interest of the government to modernize and close the gap with offshore operators in order to keep these much needed funds within the country.

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