Companies located within the European Union are subject to VAT but are able to recover their input by passing on the output to customers when determining pricing etc. Online gambling services are not subject to VAT which causes a problem for operators located in the European Union as they have no means of recovering the input VAT associated with the expenses related to their services.
The United Kingdom as well as other jurisdictions are working toward the implementation of point of consumption (POC) gaming duty on services offered to customers in their regions.
Offshore gaming regulators such as Alderney, Gibraltar, Isle of Man and Malta recover gaming duties by incorporating the cost into the fee for licensing and could lead to licensees paying double duty.
The UK plans to eliminate double taxation relief for remote gambling duty. This was put in place to relieve UK online gambling operators from the duty paid in foreign countries for their foreign customers. Operators under the jurisdiction of the Alderney Gaming Control Commission (AGCC) will not be double charged as the commission does not charge duty.
Imposing POC gaming duties in other regulated regions will not stop operators in the AGCC and based in the Bailiwick from reaping the rewards of the tax benefits offered by the islands, primarily from the lack of VAT or other taxes on consumption.
In order for an online gambling company to benefit from the Bailiwick's 0% corporate tax scheme it would need to meet the following criteria:
- The company must be based and managed in the Bailiwick.
- The company's main location generating the most of its profit is in the Bailiwick.
Taxation of gains and asset sales, known as Capital taxes, can have an effect on gambling operators should the business or assets be sold or transferred to another location. It could result in capital tax liability for such assets and property. The Bailiwick's 0% capital tax plan gives operators the chance to avoid this risk.
Employment and Property Taxation
Taxes on employment for employers has a ceiling of 6.5% plus property taxes are significantly lower than in the European Union. Employers see the Bailiwick's economy as solid based on a high demand for work so with lower salaries comes lower cost of social insurance and other business related taxes.
Income taxes are at 20% with benefits including personal allowance and relief on interest from loans, pensions and double taxation. If an employee is paid equity or holds a significant share of the company, that individual will not be subject to capital gains tax or inheritance tax.