The UK government has released its policy paper supporting the 2018 Budget, detailing the Treasury’s fiscal planning, monetary policies and industry/commercial duties.
The update confirms that the government will implement its long-awaited FOBTs £2 stake reduction from October 2019, a directive that will cost the Treasury £270 million in lost tax revenues by 2023/24.
Making up for tax shortfall, the government will increase Remote Gaming Duty from 15% to 21% from October 2019, seeking to intake tax revenues of £295 million by 2023/24, a figure certified by the Office of Budget Responsibility.
Further industry directives see the Treasury implement new tax requirements for UK licensed casinos.
Supported by HMRC, the government will add new provisions to the 2018/19 Finance Bill removing the requirement for casinos to pay gaming duty on account and allowing sector incumbents to carry forward losses held between their accounting periods.
Further to the RGD increase, sector leadership will be keeping a close eye the Treasury’s planned Digital Services Tax (DST), intended to be implemented by April 2020.
DST sees the government tackle the complex issue of taxing global digital enterprises for transactions carried-out within the UK.
Seeking to raise an initial £1.5 billion over a four-year period, DST will be set at a 2% rate on earnings linked to UK consumers, from enterprises generating yearly revenues of at least £500 million with a minimum of £25 million earnings derived from UK transactions.
The Treasury is set to provide further details on its DST proposal through a consultation, however, DST may never become effective “if an appropriate global solution” is agreed before 2020.
Reacting to the Budget 2018 announcement, Victoria Howarth and Andrew Goldstone, executive partners at global law firm Mishcon de Reya, commented via a corporate update on UK betting impacts:
“We will have to wait and see whether such a large increase in RGD rates proves too much for some operators,” read the update.
“Whilst this is clearly, and to some not unexpectedly, a change aimed at raising finance, it is an unwelcome development particularly for those larger operators who may be affected by the introduction of the Digital Services Tax – also announced today as part of the Budget.
“The changes to RGD will impact a wider audience as the Digital Services Tax is principally aimed at profitable companies with more than £500m in ‘global in-scope revenues’ and will not be introduced until April 2020 following a period of consultation. However, it will be very interesting to monitor the extent to which the two regimes overlap, if at all. Overall, given the complexities of designing and operating systems to deal with these changes, many will welcome the extra time being allowed before implementation in October 2019.”