Online Gambling Companies Face Higher Taxes In Gibraltar In 2011

The British territory of Gibraltar known affectionately as ‘The Rock’, has announced that it will be raising its taxes for all online companies starting January 2011, in order to ensure its tax regime is in line with EU fair competition regulations .
At present, online gambling companies are benefitting from paying just 1% taxes but next month will subject to the same tax rate as other Gibraltar businesses of 10%.
It is believed around twenty online gambling businesses will be affected by the tax hike, including William Hill and Ladbrokes, who moved their operations to Gibraltar recently in order to avoid paying the UK’s 13% tax rates.
Explaining that it was not all bad news for the online companies, Gibraltar’s first minister Peter Caruana said:
“To comply with EU law we must phase out the tax-exempt company in 2010. However, in order to sustain our successful economic model we must retain a commitment to a very competitive corporate tax model.”
This is borne out by the fact that come January, Gibraltar will still boast one of the lowest tax rates and with no VAT applicable is unlikely to deter any of the gaming companies already based there.
Commenting on the matter, Partygaming spokesman John Shepherd said: “We’ve known about this for some time, and we’ve factored it in. The tax is still going to be very low.”
This sentiment was also echoed by Victor Chandler, who said: “Nobody will leave. Although we’ll all complain about taxes going up.”
This will all add up to some very good news for Gibraltar who in 2009 under the previous 1% tax rate, still collected £10.5 million revenue from online gambling taxes. Providing the online operations decide to remain on the island of 30,000 people, then the Gibraltar government will be expecting that sum to sky rocket in the future.
Online gambling has proved to be an extremely important source of revenue for Gibraltar, and it is believed 2,000 people currently work in the online gaming sector, which is around 12% of the island’s workforce.