The UK Government has published a consultation and draft legislation on the introduction of a gross profits tax called machine games duty.
Machine games duty (MGD) will be charged on the net takings from the playing of machine games and, where it is payable, it will replace VAT and amusement machine licence duty (AMLD). It will include certain machines not currently subject to AMLD and will cover exempted machines, as well as certain machines not classified as "gambling machines" for regulatory purposes.
The Government believes the MGB will improve the future predictability and sustainability of the tax regime by making it more resilient to technological progress, regulatory changes and to inflation. Exempting machine games from VAT will also increase the stability of the tax regime as the playing of machine games will then have the same VAT trewatment as other gambling activities. A gross profit tax also supports the Government’s objective of a fairer tax system by ensuring the taxation of machine games is more closely linked to machine profits.
The consultation seeks views on the design characteristics of machine games duty, including the general design of the tax and specific features like the types of machine to which it should apply.
The Government is also publishing a tax impact assessment and draft legislation for comment. The consultation will close on 26 July 2011.
Subject to legislation in the Finance Bill 2012, the tax will be implemented in 2013.
