UK Tax Havens To Host Online Casino Operations

by Amanda Banks, Tax-News.com, London

23 August 2001

Alderney has just pipped the Isle of the Man to the post to be the first tax haven in the British Isles to begin receiving applications this week for online gambling licences. The Isle of Man is expected to open its doors for applications within the next month.

Both jurisdictions have introduced the relevant legislation within the past few weeks. Moran Chapman, chief executive for the Alderney Gambling Control Commission, has told reporters: 'It's not a race, it's a global industry. All sorts of people will become involved in [online gaming industry] in one shape or another.'

Currently only a few jurisdictions worldwide allow online casinos but the Internet gambling industry is increasingly becoming recognised as a rich source of revenue. Projections by groups such as US gambling consultancy The River City Group forecast the market to be worth US$5 billion by 2003.

Both Alderney and the Isle of Man have stringent rules and regulations by which the online casinos must abide and the background of all potential licence holders will undergo thorough checks. In Alderney an annual fee of £75,000 for a three year licence will be charged as well as a corporate tax rate of 20 per cent. The Isle of Man intends to charge £80,000 a year for each licence and although there is no corporate tax to pay, there will be a 2.5 per cent tax on gross gambling profits.

Ideally the jurisdictions are aiming to lure the major British bookmakers who left the UK in protest against its costly 9 per cent betting tax but are considering returning now that the government has pledged to abolish the tax from October onwards. 'At the moment we see no reason to relocate,' a William Hill spokesman said, 'but obviously we would be interested in any developments nearer to home.'

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