Welcome bonuses could become a thing of the past at UK-licensed online casinos and betting sites as the government considers reintroducing a recently scrapped tax provision.
The UK government could enforce a tax requirement on gambling operators which offer freeplays and other discounts despite deciding against it just a few months ago.
Last year, the UK tax authority, HMRC, published a policy paper which proposed that all bonuses should be included under the Remote Gaming Duty (RGD) which operators have to pay.
The new RGD would see remote gaming operators which offer free bets and bonuses treated in the same way as non-online operators that offer free bets and bonuses – the latter pay tax under HMRC rules.
The proposed changes would, therefore, require gambling operators to pay tax when a player or punter made use of a bonus on offer under the annual RGD.
In March 2017, the government announced it would be including the RGD in the Financial Bill 2017 and that freeplays would be taxed from August 1, 2017.
But MPs scrapped the legislative changes the following month, stating that there was not enough time to appropriately discuss the issues prior to the UK general election.
Therefore, online gambling operators licensed in the country are not currently required to pay taxes on bonuses, such as new players offers.
But since the government is reportedly planning to reintroduce the tax regime, UK gambling operators might not have long to prepare.
As a result, Internet casinos could limit theirs offers.
According to several UK media sources, certain parts of the original legislation which was scrapped could be reintroduced when parliament returns on September 5.
While the tax provision requires approval by MPs, as well as Royal Assent, it could come as early as September.
UK-licensed operators would then have to start paying tax under the new RGD from their first three-month accounting period commencing on August 1.
The government has estimated that the government could generate around £345m from the new tax regime over the next four years.
“This measure is intended to bring the tax treatment of freeplays for remote gaming more into line with the treatment for free bets under GBD,” the HMRC explained in its industry statement last year when the tax was first proposed.
“The costing includes a behavioural effect to account for a change in the marketing strategy of affected operators as well as the potential for firms finding ways to mitigate the impacts of the measure.”
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