by Kevin Smith -
A new taxation scheme for online gambling went into effect in the Isle of Man Wednesday.
Approved in April, the new system is aimed at making the Isle of Man a more attractive jurisdiction for prospective licensees as well as appeasing operators already based there. It is intended to better equip the Isle of Man to compete with the United Kingdom once the U.K. Gambling Act is fully implemented.
While the old duty scheme entailed a flat rate of 2.5 percent on gross gaming yield (profit on bets taken), the new scheme is based on a gradual scale. Operators are now to be taxed (on an annual basis) 2.5 percent on the first £10 million yielded, 0.5 percent on yield bet £10 million and £40 million and 0.1 percent on yield exceeding £40 million.
The updated tax structure also requires each licensee to file a report with the Isle of Man Customs and Excise office detailing the company's revenue generated from betting stakes and the amount of money paid out in prizes and winnings. The operator is further required to report its gross gaming yield and how much duty is owed.
In addition to implementing the sliding-scale scheme, the Isle of Man is abolishing its general corporate tax--an initiative that's part of the government's strategy to expand the island's technology community and enhance its reputation as a AAA rated jurisdiction.
The Treasury Department said the combination of world-class standards of regulation, transparency and telecommunication infrastructure with extremely beneficial rates of direct taxation makes the Isle of Man one of the most appealing jurisdictions in the world for any e-commerce vertical.
The Isle of Man even has generous grant packages of up to 40 percent to help offset the cost of moving, setting up operations and acquiring new office equipment for companies considering relocating to the island.
The online gambling industry has played a crucial role in getting to this point, as more than $90 million has been invested over the last five years in upgrading the island's technology infrastructure. Improvements include the implementation of Europe's first Super Fast (HSDPA) 3G network; two self-healing (SDH) fiber rings connecting the Isle of Man to both the United Kingdom and Ireland; 100 percent broadband coverage; and free ADSL and ISDN connections available to businesses and individuals.
Tim Craine, the Isle of Man's e-business director, recognizes that the online gaming industry has been a catalyst, and hopes the favorable taxation scheme will preserve the island's stature as a prime destination for technology businesses.
"We look forward to making an impact on key members in the industry by advocating the benefits of doing business in the European Union and explaining how the Isle of Man can help companies take advantage of these benefits," Craine said.
Source: Interactive Gaming News
