Gibraltar Increases Online Gambling Tax Ten Fold

Published Monday, December 20, 2010 -

Gibraltar has made a few online gambling operators a bit upset after the jurisdiction announced it would increase taxes for registered companies. Licensing and regulation of online gambling is one of Gibraltar’s main sources of revenue. The Gibraltar Regulatory Authority announced recently that they will be increasing the tax rate on online gambling from 1% to 10% starting next year. This came as a huge surprise to some major operators who moved their firms to Gibraltar to avoid the tax increase in the United Kingdom.
Ladbrokes, William Hill and Victor Chandler are all located and licensed in the English protectorate. The Guardian newspaper reported that in 2009 the Gibraltar government made €12.4 million from online gambling taxation. The tax rate was 1% with a cap of €500,000. The tax rate is being raised to 10% to bring it at the same level as the taxation on other businesses. Peter Caruana, Gibraltar's first minister, commented that the increase in tax has been implemented by Gibraltar government because of its decision to comply with European Union legal requirements. "To comply with EU law we must phase out the tax-exempt company system in 2010. However, in order to sustain our successful economic model we must retain a commitment to a very competitive corporate tax model."
Now after the huge tax increase, companies are looking again to find better jurisdictions with a more relaxed taxation system. The regional newspaper El Pais reported recently that a Victor Chandler spokesperson said, "Nobody will leave, although we'll all complain about the tax going up."
Spain is in the process of establishing a regulated online gambling system with proposed rates higher than the increased rates in Gibraltar. Companies already registered in Gibraltar will still not pay the Value Added Tax which means that the overall taxation will still remain tolerable.


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