The Isle of Man Treasury has issued a reminder to businesses alerting them to the registration requirements under the incoming Machine Games Duty (MGD) regime, a new excise duty on the takings of certain machine games, to be levied from 1 February 2013.

From February, MGD will be payable on machines where one plays for a prize, that prize is in cash and the cash prize is greater than the smallest stake the machine accepts. The takings of 'amusement machines' will continue to be subject to VAT. The levy will impact tangible machines but not virtual 'fruit machines' offered by online gambling operators.

The IoM Treasury has clarified that the following persons must register for and pay MGD in respect of dutiable machine games:

• Those who hold the relevant certificate or licence issued by the Gambling Supervision Commission (GSC);

• Those who are required to hold such a certificate or licence; or

• Those permitted by the GSC to operate a dutiable machine game under the authority of an exception or exemption.

Penalties will apply to businesses or individuals who fail to register dutiable machines, and those that fail to remit any MGD due.

This follows a change to the UK tax regime, to introduce a similar duty in lieu of value-added tax. Historically, the Isle of Man has targeted a broadly equivalent VAT regime to the UK on account of a long-standing revenue-sharing agreement between the two territories. The Isle of Man has however decided to operate a single duty 15% rate regime, as opposed to the dual rate regime to be introduced in the UK, with rates of 5% and 20%.