By Daniel Hunter
The UK Government is introducing a new law which will remove the tax advantage from betting, gaming and online bingo companies operating their data centres offshore in so-called ‘tax havens’.
“The effects will be more far reaching than these companies realise," said Stephen Norris, former MP and chairman of Virtus Data Centres, " From 1st December 2014 not only will UK betting and gaming operators lose their £300 million/year tax advantage, they will soon realise that they are paying way over the odds for electricity, Internet bandwidth, other services and staff airfares for the running of their data centres.”
Norris, who is also president of the Data Centre Alliance, continued to explain that with these extra costs - and the inconvenience of having their data centres in far away in places like Gibraltar, Isle-of-Man and the British Virgin Isles — gaming companies will quickly feel the pinch. “These excessive costs will seriously bite into their bottom-line once the tax advantage disappears.
”We forecast that they will soon wish they were enjoying the much cheaper energy and bandwidth costs (plus the convenience of being close to home) of having their data centre located in a state-of-the-art facility like Virtus’ London data centres,” he said.
The change to tax law is being introduced because the UK government has identified that it is losing some £300 million in tax revenues from UK gaming companies, many of which have relocated their data centres to a low tax economy.
Under the current law the sales transaction is deemed to take place in the data centre, hence the current tax advantage from having the data centre located in a low tax economy.
The new law will redefine the ‘legal place’ at which the transaction is deemed to take place. It will now be the address of the UK gamer or gambler’s ISP (Internet service provider), which means that it will be subject to UK taxation no matter where in the world the data centre is located.
Neil Cresswell, CEO of Virtus commented, “All gaming company CEOs and CFOs will already be aware of the tax situation, but few yet realise the double-hit from also needing to rapidly cut their excessive datacentre costs. Bringing gaming data centre operations back to London is the simple, quick option.”
Virtus London Data Centres make an ideal location for gaming and gambling companies to onshore their data centre operations. The Virtus LON1 facility, for example, is a very high spec Tier 3 data centre with low PUE and a 100 per cent uptime record. It is only a few minutes off the M25 at Junction 25, making it highly accessible for IT staff.
LON1 offers cheap and fully ‘green’ electricity (thereby avoiding CCL - the climate change levy tax). Also, being carrier-neutral, it has a large number of highly competitive carriers present including Level(3), Virgin, Geo, Pacnet and C4L. Virtus LON1 also has fast-fibre connectivity to all corners of the UK via Openreach.
Cresswell concluded: "Gaming company CEOs and CFOs have a lot to think about in the coming year. We at Virtus are expert at migrating data centre operations into our data centres without interruption to clients 24×7×365 online businesses and so are ideally poised to help.
”We’ve migrated dozens of customers and host a number of gaming companies in what are, we believe, are the most modern flexible data centres in London.”
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