We know that online gambling taxation is one of the main reasons that this industry is allowed to exist. The UK government must make some serious cash from the taxation of this entertainment industry, but exactly how much is this? Join us to find out more…
Types of Tax for the Gambling Industry
There are quite a few different forms of taxes concerning the gambling industry. These have increased in number and in percentage over the last year. With so many taxes to pay, from point of consumption to the bonus tax, these operators have felt the squeeze for the last few years.
The operator is responsible for the tax, rather than the player. This means that if you’re lucky enough to win a jackpot, you don’t need to pay additional taxes on top of this. This simplifies things for players, as you don’t need to think about the calculations around the tax.
These complex taxes make things more difficult for the operators, as they have to be able to offset this increased taxation. The bonus tax that came into play last year seriously changed the landscape of the industry, as operators have sought to reduce the amount they pay out in taxes.
The Need for Taxation
Although we think of the government as claiming this cash for themselves to use elsewhere, gambling does have some outgoings. With this money, they are able to support gambling related charities and tighten up legislation. They also use this money to fund agencies like Advertising Standards, who spend a lot of resources on the gambling industry.
This is a massive outgoing, include financial aid and fraud protection too for an eye watering sum. This is the reason why they need so many different revenue streams to fund these. With all of these drains on the industry, it’s no wonder that the operators are struggling with those taxes.
The Facts and Figures
With online gambling reaching a fever pitch, it’s easy to see just how much this is able to generate. Both UK based and remote operators must pay tax at the point of consumption and from their profits too. This is so that it’s not more lucrative for operators to be located elsewhere, to effectively dodge tax.
There’s a bingo duty and also a 15% tax for offering this service within the UK. On top of this, there’s a taxation on bonus funds, which is also added on certain sites with bonus funds. This has led to sites slashing the funds that they offer, to reduce the high amount that they must pay out.
Last year, figures from the UKGC reported that £2.7bn in taxes were paid by the gambling industry. This is a massive amount, which will potentially fund many projects for the government. This type of funding can do a lot for the government in terms of mitigating the risk of harm for users.
With so many regulatory reforms at the moment, we can see that the government wants to crack down on gambling. This could potentially create a risky situation, as they seek to bring in the same tax money while alienating these operators. Judging from the facts and figures around this, it is a lucrative business for operators and the government alike, so a balance must be struck.
Moving forward, we may see these taxes increasing to make up for any shortfall in the market. Brexit, taxes and other elements have had a serious influence on the market and operators are striving to keep up. This major part of the economy has to be sustained otherwise it could lead to a loss.
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