The bad news for Gibraltar-domiciled online gambling operators over the weekend was that the government intends lifting their tax rate from 1% to 10% from next year.
The UK newspaper The Guardian reported the hike, revealing that the local industry employs 2,000 people , or 12% of the workforce, and has helped to insulate the local economy against Spain's harsh economic climate.
Gibraltar's low tax rate has attracted many leading online gambling companies to its shores, most recently the internet divisions of Ladbrokes and William Hill, which moved from the UK and its high taxation in order to better compete with offshore rivals.
The Guardian report reveals that in 2009 the Gibraltar government add €12.4 million to its coffers from online gambling company taxes, and that n 2011 his will incease tenfold when the gaming concerns are brought into the same tax regime as other businesses. That is assuming they do not relocate to a softer tax environment.
Online companies currently pay 1% tax with a ceiling of €500,000 a year, the newspaper informs. And although this is about to rise significantly, the companies will still not pay any VAT, which means the tax regime will remain attractive.
Veteran bookie Victor Chandler told the regional newspaper El Pais: "Nobody will leave, although we'll all complain about the tax going up."
Gibraltar's first minister, Peter Caruana, said that the increase in tax is part of the Gibraltar government's strategy to conform with European law.
"To comply with EU law we must phase out the tax-exempt company system in 2010," he said. "However, in order to sustain our successful economic model we must retain a commitment to a very competitive corporate tax model."
Top online gambling companies are resident on The Rock, as Gibraltar is nicknamed. These include Party Gaming, Victor Chandler, William Hill and Ladbrokes.
The Guardian pointed out in a sidetrack to its main tax story that Gibraltar's neighbour Spain has internet gambling regulations in the pipeline to cater for the online gambling demand from some 200,000 Spaniards who wagered around €575 million over the internet in 2009.
Source: InfoPowa News