Chancellor of the Exchequer Gordon Brown will announce plans in next month's Budget that will set in motion the regulation and licensing of the online gambling industry.
It is expected that in return for a small amount of tax, companies can obtain a UK licence and continue operating overseas. The amount of tax is not confirmed but could be as low as 2 percent. The new tax will be called Remote Gaming Duty. This compromise would allow gambling companies to avoid British VAT.
Many of the UK’s gaming companies such as 888 Holdings and PartyPoker are based in Gibraltar and other offshore locations, and the government has been keen to find a way of taxing these firms.
From September the companies will be allowed for the first time to relocate to the UK and obtain a licence under the Gambling Act. However, all companies have said they would never relocate to the UK if they had to pay a tax on gross wins as high street casinos do. Bricks-and-mortar casinos pay tax of up to 40 percent depending on their size.
John O'Reilly, the head of online gambling at Ladbrokes was pleased with the plans, confirming that if the rate of tax was less than 3 percent, Ladbrokes would have no problem signing up for a UK licence.