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PRIME MINISTER DAVID CAMERON WOULD BE WITNESSING A BLOW TO UK PLC WITH A 15 PER CENT GROSS PROFITS TAX
Commission proposes ban on mixing funds REGULATION
he UK Gambling Commission is planning to ban the practice of comingling customer and company funds by operators as the regulator aims to increase protection for consumers when operators go out of business. While it recognises that such a ban wouldn’t necessarily ensure greater protection, it suggests that ‘it may help to provide earlier indication of financial stress’. The Commission is consulting on the level of protection for customer funds and has put six options up for consideration: Segregated accounts, a ‘Quistclose’ trust (in which funds are specifically for one purpose), insurance against insolvency, an independent trust account, a reserve held by the regulator, and rules for specific gambling products (remote poker, in particular). The regulator said: “In considering the issues for a minimum level of protection, we wish to balance the advantages of protecting customer funds against the additional costs to both operators and customers. The additional burden must be in line with the potential risks, and must be balanced against the potential risk that customers may opt to seek out unregulated gambling.” The Commission also said that it ‘considers it appropriate’ that where a common wallet is offered to customers by a Commission-licensed operator that all customer funds, regardless of source, should be held in one or more customer accounts which are afforded the same level of protection. Among the other issues up for discussion in the consultation are the actual definition of customer funds, the flexibility needed depending on frequency of reconciliation, whether the demands are disproportionate on smaller operators and the requirements on where customer funds may be held.
T Tax rate should be ‘no higher than 10 per cent’ A study by KPMG has suggested that the UK’s proposed point of consumption regulation will not work under a 15 per cent gross profits tax. TAXATION
he government needs to drop its remote gaming tax to 10 per cent if its point of consumption licensing regulation is going to be a success, according to a report by KPMG. The study, commissioned by The Remote Gambling Association (RGA), has concluded that the Treasury’s proposed 15 per cent rate is likely to undermine the legislation’s aims and that unless the rate of gross profits tax is set at ‘no higher than 10 per cent’, and makes allowances for companies to offset costs associated with bonuses and incentives, then a considerable slice of remote gaming business will migrate to the ‘grey market’. It also stressed the importance of getting the tax regime right
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first time. According to the KPMG report: “The dangers of introducing the proposed rate of 15 per cent immediately are: firms are unable to recover their costs and either go out of business or are forced to operate in the grey market; and/or a very large number of UK customers switch to buying gambling products from offshore duty avoiding providers because they are able to offer lower priced, more attractive, products. If either of these come to pass, then it may be difficult to reverse these consequences with a subsequent reduction in the tax rate.” The government’s proposals to maintain the current position where some player bonuses in bingo, poker and casino gaming are not tax deductible will
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further damage the ability of licensed and taxpaying operators, who will already be required to meet a significantly higher tax burden, to compete with those overseas operators who will continue to target the UK market without holding the requisite licences or paying tax. RGA chief executive Clive Hawkswood said: “It is vitally important that the government does not repeat past mistakes. It needs instead to set rates of remote gaming and betting taxation that give operators a realistic chance of being competitive in what is an inherently international market.” Hawkswood said that the RGA will continue to engage with Treasury to ensure the impact of any tax changes is fully understood by the government.
He also pointed out that the online gambling industry is a UK success story and already contributes significantly to UK Plc in terms of jobs, marketing spend and corporate taxes and that this could be put in jeopardy by the government’s plans. He added: “We argue strongly that any rate above 10 per cent GPT is not sustainable in what is a very mature market where consumers already know what level of value and choice to expect. In two reports, Parliament’s Culture, Media & Sport Select Committee has already urged the government to get the tax regime right and it is in the interests of all concerned that HM Treasury takes note of that and all of the evidence which points to a sustainable rate being no higher than 10 per cent.”