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Isle Of Man Readies Machine Games Duty

by Jason Gorringe, Tax-News.com, London

26 November 2012


The Isle of Man government has announced that businesses must now register for the payment of Machine Games Duty (MGD), a new excise duty on the takings of certain machine games, to be levied from February 1, 2013.

From February, MGD will be payable on machines where one plays for a prize, that prize is in cash and the cash prize is greater than the smallest stake the machine accepts. The takings of "amusement machines" will continue to be subject to value-added tax (VAT). The levy will impact tangible machines but not virtual "fruit machines" offered by online gambling operators.

Businesses or individuals who have been approved to operate such a machine by the Gambling Supervision Commission must register with the island's Customs and Excise department, from December 1, 2012, but no later than February 1, 2013.

A new guidance paper, Notice 452 MAN is to be published on the Customs and Excise department's website providing further details of the regime.

The decision to introduce MGD comes following a change to the UK tax regime, to introduce a similar duty in lieu of value-added tax. Historically, the Isle of Man has targeted a broadly-equivalent VAT regime to the United Kingdom on account of a long-standing revenue-sharing agreement between the two territories. The Isle of Man has however decided to operate a single-duty 15%-rate regime, as opposed to the dual-rate regime to be introduced in the United Kingdom, with rates of 5% and 20%.

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.

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

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