How Casino Operators Should React to the 2015 UK POC Tax

Operators who want to create casino websites in the UK should know that gaming legislation in the country is in for a big change in 2015. New regulation that covers the online gambling sector has already come into force since last year. The new tax regime refers to UK remote gaming, and is known as the ‘point of consumption tax’. The reform is meant to ensure that all operators who cater to UK customers will make a fair contribution to the UK state coffers.

Gaming operators who will be affected by the new tax regime will now include all operators who provide gaming services to UK residents, regardless of where their licenses and operations are based. At this point in time, there is a large number of gaming companies that based their operations in tax havens, such as Gibraltar or Isle of Man.

For example, up to now, an operator who held a license from the Isle of Man was able to cater to UK residents, and only paid taxes (which were very low) in the Isle of Man. Starting with 2015, this operator will have to comply with all UK gaming legislation, including obtaining a license from the UK Gambling Commission and paying the 15 percent tax on profits. In conclusion, operators who want to create casino websites will no longer comply with a place of supply regime, but with a point of consumption legislation.

The tax level has already been set to 15 percent of profits, which is considered slightly higher than gaming insiders expected. KPMG has already explained that operators could be confronted with the situation of going out of business, due to the fact that many of them might not be able to absorb the tax.

In order to prepare for the upcoming changes, operators who intend to create casino websites should take into consideration the following aspects:

• Taking expert advice on tax matters: gaming companies should seek advisers that can properly determine ways to minimize costs in order to cover the gap caused by the new tax regime;
• Minimizing double taxation: operators who want to cater to UK residents will have to make sure that they do not pay gaming duties elsewhere except the UK. For example, if they are based in tax havens such as Isle of Man or Gibraltar, there may also be additional costs;
• Retaining customers: operators should do their best to keep their already-existing customers. A strategy should be created so that players will remain loyal. Even so, it is important to attract new players, but they should not be rewarded with huge, unrealistic bonuses;
• Invest in marketing: taking into consideration that the market is extremely competitive, marketing is crucial regardless of the tax regime. Operators who want to create casino websites for UK consumers should consider that by cutting marketing expenses, the business could be seriously affected. No matter what, marketing helps making online casinos visible to potential customers.
• Try not to pass the costs on players: in the highly competitive UK gaming market, it would be a mistake to absorb the new costs by passing it on to the customer. Given that online casino players are price-sensitive, many of them could switch to playing at other gaming sites who offer less expensive products.