HM Treasury

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24 May 2011

Government publishes consultation on machine games duty

The Government today 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).

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.

Notes for Editors

1. The full consultation is available in the consultation section of the Treasury website under Machine Games Duty Implementation

2. The Government announced its intention to introduce machine games duty, replacing AMLD and VAT on gaming machines where it is payable, on 9 December 2010. This intention to introduce MGD was confirmed in the 2011 Budget.

3. This followed a consultation in July 2009, the responses to which were published on 9 December 2010. More information on the December 2010 announcement can be found in the Machine Games Duty Implementation consultation.

4. MGD will be due on the net takings from the playing of machine games. These are games where customers pay to play a game on a machine in the hope of winning a prize which is greater than the cost to play. AMLD will be brought to an end and all machine games subject to MGD will become exempt from VAT.

5. MGD will include certain machines not currently subject to AMLD. It will cover exempted machines, as well as certain machines not classified as “gaming machines” for regulatory purposes.

6. MGD is a gross profits tax (GPT), which the Government believes 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 treatment as other gambling activities. A GPT 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.

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