American Casinos Deterred From UK By High Tax
By by Robert Lee, Tax-News.com, London
23 December 2003

Despite plans to deregulate the sector next year, it has emerged that American gaming giants such as MGM Mirage are not prepared to invest in large scale projects in the United Kingdom unless the government lowers the amount of tax they will pay.

At present, large, profitable casinos in the UK pay a tax rate of 40%, a level that Lloyd Nathan, managing director of MGM Mirage Development Europe, says is “prohibitive” to the large-scale investment the government is hoping to attract.

"The American operators will not make investments in large resort casinos if the gross profit tax is above 20 per cent. That is what they are looking for," a UK industry executive told the Independent on Monday.

MGM have recently concluded a development deal with Newcastle United Football Club, though reports state that the whole project is conditional on a reduction of casino tax. "If you look at other jurisdictions you will see a direct relationship between a low and stable taxation rate and resultant high investment. The higher the tax the lower the lower the investment," Mr Nathan observed.

According to a recent study undertaken by Pion Economics and Professor Neville Topham, deregulation of the gaming industry in the UK could attract £5 billion in foreign investment. However, Professor Topham said the study was based on the assumption of a 15% tax rate.

“It is hard to say what the right tax rate should be in isolation because it is part of a number of other issues such as the shape and detail of deregulation”, he revealed to the Independent. “But I can say affirmatively it is too high at the moment.”

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