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IoM To Introduce New Duty On Gambling Machines

by Jason Gorringe, Tax-News.com, London

05 September 2012


The Isle of Man government has launched a consultation on the introduction of a gaming duty on the takings of certain machines used for gambling purposes from February 1, 2013.

Under present rules, the Manx government levies a licence fee (known as 'interim duty'), and also levies value-added tax (VAT) on the takings of certain machines. The government has confirmed that from February 1, 2013, these duties will no longer be levied, and a replacement levy is under consideration.

The decision comes in response to a forthcoming change to the UK VAT regime, which will see a new levy, Machine Games Duty, introduced to replace VAT. The Isle of Man targets equivalence with the United Kingdom's VAT regime under a long-standing revenue-sharing agreement.

The government confirmed the replacement duty would only impact machines providing gambling services, and clarified that machines used only for amusement are not to be impacted by the change; their takings will continue to be liable to VAT following the change.

The removal of VAT from the takings of gaming machines will bring the two regimes in line with European Union rules on gambling activity, which provide that such activity should normally be exempt from VAT.

The government has proposed that a single duty-rate of 15% be introduced in lieu of VAT. This will differ from the UK tax, which will involve two rates of 20% and 5%.

The levy will impact tangible machines, not e-gambling, such as virtual 'fruit machines' offered by an online gambling operators.

TAGS: Isle of Man | tax | value added tax (VAT) | law | international financial centres (IFC) | United Kingdom | offshore | gambling | legislation | offshore e-gaming

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