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| UK Gaming Company Exodus Begins |
by Robert Lee, Tax-News.com, London
Tuesday, August 11, 2009
Ladbrokes has announced that it will follow suit with William Hill and relocate
to Gibraltar by the end of the year, in order to maintain international competitiveness.
Currently, Ladbrokes’ sportsbook operations are based in London and incur
15% Gross Profits Tax and 15% VAT on input costs, as well as corporation tax.
British-based bookmakers must also pay a Horserace Betting Levy of 10%
of profits on British horseracing. Ladbrokes expects that moving offshore
will substantially reduce its tax liabilities – offshore regimes typically offer a corporation
tax rate of between 1% and 2%, with no requirement to pay the UK’s horseracing
levy.
Christopher Bell, Chief Executive Officer of Ladbrokes, commented: "Our
award winning sportsbook is the biggest in the UK market but faces aggressive
competition from offshore operators who hold a very significant cost advantage
by operating from low tax jurisdictions. Operating from the UK has become unsustainable
and we will relocate by the year end."
The announcement was disclosed within Ladbrokes half-year results, released
August 6, which noted that profits had declined
due to slower growth and increasing levels of competition from offshore
operators.
While Ladbrokes will relocate its online operations to Gibraltar, it will retain
its call centre operations for telephone betting in the UK. “A number
of cost reduction measures are being taken to safeguard the future of the business
including redeploying staff and utilising new technology to reduce costs per
call,” noted Ladbrokes interim results.
It would appear that William Hill, which on August 4 announced its decision to move offshore, has triggered a mass exodus; Betfair, another online UK gambling
company, in an interview with The Guardian newspaper, underscored that it had not ruled
out a similar move, noting that the UK’s tax regime was "not ideal" and put it
"at a competitive disadvantage."
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