William Hill Looks Offshore To Reduce Tax BurdenAugust 3, 2009 7:14 am
The British government’s decision to increase the tax rate for Internet gambling operations seems to be rebounding as more internet betting businesses are starting to turn their attention offshore.
William Hill and other online betting companies are becoming dissatisfied with the 15% tax rates which are levied on them, particularly as a move offshore could mean them paying as little as 1.5% tax on gross profit and thus savings of millions of pounds per year. The company says paying such a high tax rate is putting them at a disadvantage in the wider market and given the challenging global economic conditions a relocation to Gibraltar would seem the logical move.
William Hill’s interim revenue results are expected to be released Tuesday, and if, as expected they then announce their decision to relocate, William Hill’s chief rivals in the UK, Ladbrokes and Coral, may too be forced to do the same in order to remain competitive. This in turn could result in the Treasury losing around £50 million per annum as well as scuppering Gordon Brown’s vision of turning the UK into a central destination for online gambling companies.
The decision to transfer in whole its online sports and phone betting operations to Gibraltar would certainly come as a blow to the UK government, but in a sign of growing frustration with the UK tax duties, Ralph Topping, William Hill’s chief executive, had already transferred part of that business and 90 staff out there in February. Although this was seen as the company covering all its options at the time, a complete relocation would now not only seem likely but would also be quite effortless with operations in Gibraltar already established.
The company maintains its objectives are strategic and its focus on the international market has meant already basing parts of its business in Malta and Gibraltar, as well as locating offices and staff in Israel, Bulgaria and the Philippines. William Hill would still continue to pay taxes on its physical betting shop operations in the UK.