Online Bingo tax system under scrutiny

The vast majority of online bingo companies operate offshore from the UK, thus avoiding large taxes and licensing fees. However, there is an expectation that this might be about to change after the UK government’s decision to investigate matters.

While such offshore activities are not illegal whatsoever, it could have huge implications for the online bingo industry. Being situated out of the UK gives online companies a huge advantage over their land-based counterparts, with the majority of smaller operators in support of equal taxation levels at 15%. However, there are several big gaming companies who have land-based operations in the UK and also offshore online interests.

Offshore companies only pay 1% tax, compared with the 15% that would be levied on the mainland, but they are still able to make full use of UK advertising and media. In bingo, up to 50% of profits go towards affiliate fees, and 15% in software licensing fees. Bingo companies then have to fund marketing and advertising schemes to attract players to their site.

The government report is expected to conclude that offshore gaming companies must obtain a British-specific licence to bring them in line with other European countries. Given the condition of the UK’s finances at the moment, it seems inevitable that the Government will be hoping to make some money from such offshore operations.