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The UK government is considering scrapping the current three-banded tax rate system and replacing it with a single tax for all remote gambling operators.
The proposed reform, called the Remote Betting & Gaming Duty (RBGD), will apply to all online gambling operators and would see an end to the Remote Gaming Duty (RGD), General Betting Duty (GBD), and Pool Betting Duty (PBD) systems.
The government has invited stakeholders to submit their inputs on the new reform, so it can have greater knowledge on how to achieve its goals and simplify the taxing system, while reducing administrative friction for all stakeholders. The 12-week consultation timeline was announced by the HM Revenue & Customs (HMRC) in a press release yesterday (Apr 28).
Remote Gambling Market Has Grown Beyond the Current System
The remote gambling sector has experienced significant expansion, outpacing the existing regulatory framework designed to manage it. As more consumers turn to online platforms for their betting needs, the limitations of the current tax structure have become increasingly evident.
Under the current system, remote gambling operators face a range of tax obligations: Remote Gambling Duty (RGD) is set at 21% of profits, while both the General Betting Duty (GBD) and the Pool Betting Duty (PBD) are taxed at 15%, but calculated differently.
“The tax system needs to keep pace with the developments and innovation that have seen the UK-facing remote gambling sector change significantly in recent years,” said James Murray, Exchequer Secretary to the Treasury, in the proposal document.
“Since remote gambling was first developed it has grown exponentially; the three-tax system needs to adapt to reflect the dynamic and expanding nature of the sector.”
Recommendations Needed
The recent review by HMRC and the Treasury has prompted a critical reassessment of the current tax structure governing the remote gambling industry. Officials have determined that the rationale for maintaining separate tax categories is no longer compelling, especially given the industry’s evolving objectives, such as reducing player harm. This finding has led to the launch of a consultation aimed at gathering insights from industry stakeholders.
As part of this consultation, the government is actively seeking recommendations on how to construct a unified tax framework. Stakeholders are encouraged to provide feedback on the calculation methods for the proposed Remote Gambling and Betting Duty (RGBD) and to identify which activities should be included under its scope.
The consultation also addresses how promotional tools like free-play bonuses and free bets should be handled within this new framework. Suggestions regarding enforcement measures and penalties for non-compliance are also invited.
“Gambling has increasingly shifted online, with gross gambling yield for remote gambling now at £6.9 billion per year, having seen over 200% growth in the last 10 years and 20% growth in the last five years,” Murray stated in the proposal.
This effort comes after last year’s intense speculation about a potential steep increase in remote gambling tax rates, which briefly caused a downturn in gambling-related stocks. Although those tax hikes did not occur, there are plans to include new reforms in forthcoming budget discussions.
The consultation process for the unified Remote Gambling and Betting Duty (RGBD) will run for 12 weeks and conclude on July 21. Experts are predicting final decisions in the Autumn Budget later this year.
Source: YogoNet
