GAMBLING DUTIES

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Gambling Duty on the Isle of Man is based on profit, NOT turnover. Duty is paid on either ‘stakes minus winnings’ or ‘retained profit’ depending on the type of gambling activity. With written approval from Customs and Excise, an operator may be authorised to exclude affiliate payments from their duty calculation. The Gambling Duty rates are:

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GROSS GAMING YIELD 

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<20,000,000 GBP                                              1.5%

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>20,000,000 - <40,000,000 GBP                    0.5%

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>40,000,000 GBP                                               0.1%

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Note –duty is based on gross gaming yield/profit, not turnover

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CORPORATE TAXES

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Resident Corporation Income Tax Rate.            (%)0(a)

Capital Gains Tax Rate                                          (%)0 

Branch Tax Rate                                                    (%)0(a)

Withholding Tax                                                    (%)  

Dividends                                                                0 

Interest                                                                    0(b)

Royalties                                                                 0 

Net Operating Losses  

Carryback                                                               1(c)

Carryforward                                                          Unlimited(c)

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(a)The standard 0% rate of corporate income tax applies to all profits derived by companies except for the following:

• Certain banking business in the Isle of Man and certain retail business in the Isle of Man, which are subject to tax at a rate of 10%

• Profits arising from land and property in the Isle of Man, which are subject to tax at a rate of 20%

 

(b)Information is exchanged automatically in all cases.

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(c)Loss relief is available in certain circumstances (see Section C).

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TAXES ON CORPORATE INCOME AND GAINS

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Corporate income tax. Companies resident in the Isle of Man are subject to income tax on their worldwide income, but relief from double taxation may be available. A nonresident company with a branch carrying on a trade in the Isle of Man is subject to tax on the income of the branch. A company is resident in the Isle of Man if it is incorporated in the Isle of Man or if the central management and control of the company is exercised there.

 

Rates of corporation tax. The standard rate of corporate income tax is 0%. This rate applies to all profits derived by trading and investment companies, except for the following:

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• Certain banking business in the Isle of Man and certain retail business in the Isle of Man, which are subject to tax at a rate of 10%

• Profits arising from land and property in the Isle of Man, which are subject to tax at a rate of 20%

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Trading companies may also elect to be taxed at the 10% rate.

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Special types of companies. Special types of companies in the Isle of Man are described briefly below.

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Funds industry. The Isle of Man has a full suite of fund options, with the Specialist Funds being a popular vehicle for alternative investment. Management fees, including administration services’ fees, to Specialist Funds, are exempt for value-added tax (VAT) purposes if the services are provided from the IOM. Specialist Funds can include close-ended investment trust companies. The exemption can also cover UK-listed investment entities, including investment trust companies, venture capital trusts, and certain overseas funds.

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The Isle of Man also offers exempt schemes that are not subject to regulation. Exempt schemes may have up to 49 members (provided the scheme is not available to the public; that is, it is a private engagement). Virtually all types of assets can be held in these schemes.

Overseas funds may be administered in the Isle of Man without being subject to Isle of Man regulations if they are incorporated in a jurisdiction with an appropriate regulatory framework.

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Limited liability companies. The Limited Liability Companies Act 1996 allows for the formation of limited liability companies (LLCs). The liability of the members of an LLC is limited to the members’ contributions to capital.

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For Manx tax purposes, an LLC is treated like a partnership. Consequently, an LLC’s profits are allocated among its members for tax purposes.

New Manx Vehicles. The New Manx Vehicle (NMV) is a corporate vehicle that is subject to simplified filing requirements and that is designed to be flexible and inexpensive to administer. It is taxed in the same manner as normal Isle of Man companies.

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Manx foundations. Under the Foundations Act 2011, foundations can be created in the Isle of Man. Manx foundations are regarded as corporate taxpayers for purposes of Manx corporate income tax and are taxed in the same manner as normal Isle of Man companies. Manx foundations are of particular interest to persons who are from civil law jurisdictions.

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Capital gains. The Isle of Man does not impose a tax on capital gains.

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Administration. Tax returns must be filed within 12 months and 1 day after the accounting year-end, and any tax payable is due at the same time. In certain circumstances, companies wholly subject to the 0% rate file shortened tax returns.

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Filing penalties apply for the late submission of company returns. The first penalty is GBP250. A further penalty of GBP500 is imposed if the return is not filed within 18 months and 1 day after the end of the accounting period. If the return remains outstanding 24 months after the end of the accounting period, the company and its officers may be subject to criminal proceedings.

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Withholding taxes. In general, no withholding tax is imposed on dividends, interest and royalties paid by Isle of Man resident companies. The Assessor of Income Tax may require a person who makes a payment or credit of taxable income to a person resident outside the Isle of Man to deduct income tax from such payment or credit at a rate specified by the Assessor. For example, a 20% withholding tax is imposed on Isle of Man rent paid by Isle of Man resident companies to nonresident companies and individuals.

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Foreign tax relief. Foreign tax on income of a resident company may be credited against Manx income tax on the same profits. Foreign tax relief cannot exceed the income tax assessed by the Isle of Man on those profits.

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To continue reading, and to obtain the full publication, please visit: https://www.ey.com

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The content is based on information current as of 1 January 2018, unless otherwise indicated in the text of the chapter. Changes to the tax laws and other applicable rules in various countries covered by this publication may be proposed. Therefore, readers should seek independent tax advice from their local and international firms to obtain further information.

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This publication contains information in summary form and is sourced from the Ernst & Young Worldwide Corporate Tax Guide, and is therefore intended for general guidance only. It is not intended to be a substitute for detailed research or the exercise of professional judgment. Neither Aston & Willson LLP  or EYGM Limited nor any other member of an organization can accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate advisor.