Gibraltar to raise tax on operators in 2011
Jurisdiction to introduce new corporation tax of 10% from next year, but operators will continue to pay no VAT.
Gibraltar is to raise corporation tax on online companies to ensure the rates are in keeping with EU regulations.
Currently online companies pay 1% gaming tax, with a ceiling of £425,000, but a new corporation tax rate of 10% will apply to all companies except energy and utility providers. This new rate is to be introduced from 1 January 2011.
Operators will still not have to pay any VAT, offsetting the forthcoming tax rise and maintaining the peninsula as an attractive domicile for major egaming operators.
Victor Chandler, one of the first operators to move to the domicile in 1998, predicted that the tax hike is unlikely to prompt any operators to leave, the company’s eponymous chairman telling the El Pais newspaper: “Nobody will leave, although we’ll all complain about the tax going up.”
Currently Gibraltar earns around 12.4m in taxes from online gaming companies each year, so the jurisdiction is in for a significant boost in income when the new corporation tax is introduced. Online gambling currently employs around 2,000 people in the British overseas territory, around 12% of the total workforce.
Both Ladbrokes and William Hill moved online operations to the jurisdiction last year, arguing the UK government’s 15% tax unfairly disadvantaged their businesses relative to low-tax offshore operators such as Gibraltar-licensed Bwin and Ireland-based Paddy Power.