hat analysis can you give regarding new UK tax laws?
On the Isle of Man my department conducted a series of interviews with a number of our operators, corporate service providers, lawyers and accountants to assess the potential impact of the new legislation. We also discussed the wider implications with key UK advisers and with our contacts worldwide.
Why do you think the effect of UK tax on the Isle of Man's online gaming sector will be minimal?
Only around 7% of UK player activity prior to the change in regulations was placed through operators licensed on the Isle of Man. The Island has been chosen by a wide range of operators who have taken a holistic view on where to establish their operations and with the introduction of the place of consumption tax, while the impact on their bottom line has not materially affected that view.
Does it benefit Isle of Man? Why? Why not?
The impact on the e-gaming market in general will be widespread across all jurisdictions where operators target the UK market, meaning that we expect a significant number of mergers & acquisitions as companies look to reduce their cost base to meet the additional tax benefit. We also expect a reduction in start-up businesses targeting the UK as their profitability will be adversely affected and therefore their ability to raise funds will be reduced. To benefit our licensees in these changing circumstances we have made three key advances: We have agreed with the UK Tax authorities that Isle of Man operators will not require the services of a fiscal representative, thereby saving those operators substantial costs; we have agreed with the UK Gambling Commission that all dispute resolution for our licensees with UK players will be handled through our Gambling Supervision Commission; and we have also passed an amendment to legislation allowing Double Duty Relief for our licensees with UK players.
What are the advantages of Man licensing?
In addition to the points above, our operators benefit from an excellent technology infrastructure - we generate all of our own power and sell excess to the UK which means that uptime on the Island is second to none and executives can sleep easily without worrying about power cuts or loss of service. Our telecommunications capabilities are also first class with self-healing rings taking data on and off island which is vital when handling the level of time critical transaction processing that goes with online gaming. The Isle of Man provides an excellent environment for companies and families to locate in a safe and thriving environment with a very attractive tax structure. Global industry leaders such as Poker Stars and Microgaming have set up their headquarters here and have attracted key staff from both the local talent pool as well as worldwide. With mind and management set up on the Island, companies do not need to be concerned with the fast-growing global movement towards stamping out “brass plaque” jurisdictions.
What are the next steps?
With the uncertainty surrounding company establishment receding as the new regulations finally come into force in the UK, we are starting to see a number of well-funded companies with new IP and ideas looking for the best home to set up and some are already visiting us on the Island. We expect a very busy ICE in London in February!