Comparison of offshore and onshore gaming licenses
New technologies have made it possible to expand entertainment options and also created new business areas, such as online gaming, games, betting and other gambling and entertainment. As with any business activity, the gambling business needs proper protection and favorable conditions for optimizing the tax burden. Offshore for online casinos is a very attractive option, since onshore jurisdictions have very strict legislation regarding this business activity. However, onshore spaces also have their own distinctive features and benefits. Below we will look at the main features of these spaces and the procedures for obtaining the appropriate gambling licenses in them.
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Offshore VS Onshore Benefits
So, first, let’s turn our attention to offshore jurisdictions for gambling. One of the first advantages that foreign entrepreneurs pay attention to is the low cost of the permit. When compared with similar, but more popular jurisdictions, offshore license fees and associated costs are much lower. This advantage makes such jurisdictions an optimal place for small gaming companies and startups with limited budgets to operate. There is a fixed annual fee for the license, which includes all types of fees.
Offshore companies are registered in those countries that attract investors with preferential tax policies. Most people are attracted by the cost savings. The process of registering a business in an offshore country is extremely simple and transparent. In this case, significant funds and time are not needed. There may be some requirements and restrictions.
As global gaming law sets, companies that operate overseas can often quickly adapt to cultural and linguistic differences. Thanks to their flexibility and ability to adapt to different work environments, they can reap benefits such as saving on their own tax burden. This makes it possible to conduct research and development of new products and hire the best specialists from all over the world to work on their projects. Taken together, this leads to very high levels of business competitiveness on the world stage. As a rule, registering a foreign company in an offshore country is simple and straightforward. The process does not require a lot of time and money.
The advantages of offshore companies are listed below.
1. In addition to the lack of taxation, offshores are attractive for business due to their high level of confidentiality. In offshore companies there is no register of directors, most information is not disclosed, including transactions.
2. Also in such states there is no or simplified reporting. It is enough that the accounting registers are stored in a specific place.
3. You can register a company offshore with a minimum of documents in one day.
Among best gaming license jurisdiction list in this category we can mention Curacao, Anjouan and Vanuatu.
Onshore gambling firms are the exact opposite of offshore companies. Onshores are registered in countries that do not offer any preferential tax options. We can say that these are countries with direct taxation of their resident legal entities and individuals. We can say that even companies that are registered offshore, but conduct domestic economic activities and do not have tax benefits, are classic onshores. This is about the question that everything is relative in our complex world.
Typically, onshore companies are registered in countries that are more economically developed, have a number of unique resources, business culture or achievements in a particular area of interest to entrepreneurs from other countries.
It should also be noted that onshore companies are less confidential, because in many cases, it is simply necessary to publish the results of activities indicating the composition of major shareholders. Onshore companies are registered in countries where preferential taxation is not provided.
Other distinctive features of onshore companies:
*lack of confidentiality: information about companies is publicly available, making them subject to government control;
*reduction in labor costs: offshore companies are usually located in less developed countries, where wages are lower.
In total, the activities of onshore companies are more controlled by the state and less efficient due to the tax burden and significant costs of recording their economic and financial activities. Among TOP gaming license jurisdiction lists in this category we can mention Britain, Cyprus and some others.
Licensing Procedure for Obtaining Offshore and Onshore Gaming Licenses: Documentation and Gaming License Requirements
Any registration of a company abroad, whether onshore or offshore, is considered by law as making an investment abroad and is regulated accordingly. First of all, it is necessary to determine the optimal jurisdiction for opening a company. Just a few years ago, offshore companies were popular because they made it possible to reduce the tax burden on businesses. Today, onshores are coming to the fore, which make it possible to use a company on the international market; they are prestigious, convenient to register and maintain. In turn, they provide advantages in relation to certain benefits, open up the possibility of using unique organizational and legal forms, and provide for the protection of the rights and interests of the company in the process of its activities in the international market.
So, let’s look at the procedure for getting offshore gaming licenses. An online casino license opens up the following opportunities for a company:
*engage in gambling in all countries where this activity is legalized and does not require a local license, except for the place of registration;
*sign agreements with merchant service providers;
*open bank accounts;
*hold intellectual property rights;
*conduct any legal commercial activity.
To initiate the procedure, a potential licensee must fulfill a number of conditions:
*register a legal entity;
*confirm fully-covering fulfillment of compliance requirements;
*select a local representative;
*obtain domain ownership;
*place at least one server on the island;
*ensure that each user completes the AML procedure;
*pass software certification;
*prepare a technical audit of the gaming system.
The package of documents for gaming license acquisition includes:
*information about the founder and management team, including identification documents;
*letter of recommendation from the bank;
*confirmation of residential address;
*description of all selected areas of gambling activity;
*organizational chart of the company.
On average, the review procedure takes about 3 weeks. It is worth noting that any conditions, regulatory parameters and deadlines vary depending on the individual characteristics of the chosen gaming license country.
The main advantages of such jurisdictions for iGaming and gamble-activities in a whole include next-mentioned:
1. Relatively low license cost compared to other jurisdictions.
2. Minimum tax deductions.
3. The most simplified procedure for licensing a gambling business
4. General license for any type of gambling business.
5. The shortest possible time to obtain gaming license.
The system of conducting gambling business in offshore jurisdictions today is well regulated. Government policies aimed at creating favorable conditions for businesses related to lotteries and gambling played an important role in this. Local commissions and other regulators are official government bodies that issue licenses to gambling industry entities.
Now let’s turn our attention to onshore gaming licenses. Regarding onshores, no matter what type of gambling license the applicant chooses, he must understand that the process will be lengthy and require careful preparation. The general set of rules is available for everyone to study, so candidates are checked by members of the commission on all points. First of all, applicants must meet the following conditions:
*prove that they will adhere to the rules of fair play;
*eliminate children’s access to gaming;
*ensure the safety of people addicted to gambling;
*help law enforcement agencies identify illegal activities in the segment.
Applicants will also need:
*an operating office in the territory of the selected jurisdiction (it can be rented or owned);
*a hired director with local residence;
*ensure that a security deposit is deposited into the account in the amount established by local regulations.
An impressive package of documents is presented to the commission for consideration:
*constituent documents of the company or personal identification card;
*completed application form;
*gaming compliance norms confirmation;
*business plan;
*ready forecast for the coming year;
*disclosure of funding sources;
*software certificates and more.
Any shortcomings in the design or content of documents reduce the chances of approval of the application. Once again, conditions, regulatory parameters and other features may vary and differ depending on the chosen market space. Above is a general list.
To identify at-risk players, licensees must implement appropriate responsible gaming procedures. They are also required to provide this category of players with sufficient information and encourage them to contact counseling services if necessary. Licensees must maintain financial ratios set by the Gambling Board and provide reports to it at predetermined intervals and in a prescribed format. Cash transactions associated with the account are not permitted.
As a rule, a gambling license is considered a universal document. The holder will be able to use it to cover different types of verticals. The license is suitable for both B2C and B2B projects. A gambling company can organize games, develop software for poker rooms and casinos, etc. Having this document in hand, the business will gain the necessary flexibility and be able to correctly distribute risks.
Our team is ready to provide you with comprehensive advisory and practical assistance in obtaining this permit or purchasing a ready-made solution, as well as conduct a country comparison. We are always in touch and fully ready to cooperate.
Article’s author is Denys Chernyshov – founder and CEO of the globally-famous organization Eternity Law International.
