Gibraltar to Raise Taxes on Online Gambling Companies

Gibraltar has long been a haven for online gambling companies due to the low tax rates levied on those firms. However, it seems that Gibraltar will be increasing their gaming taxes tenfold, moving them from 1% to 10%.

This change may sound scary, but experts suggest that it is unlikely to cause any of the major gambling operations to move to greener pastures. According to a report in The Guardian, while online companies will now pay the standard 10% tax rate paid by other businesses, they will still not be subjected to any Value Added Tax (VAT), meaning Gibraltar will remain an attractive venue for hosting gambling companies.

“Nobody will leave,” said Victor Chandler to the El País newspaper, “although we’ll all complain about the tax going up.”

Chandler is the chairman of Victor Chandler International, one of the oldest independent bookmakers in the United Kingdom. Established in 1946, it does much of its business online now, including sports betting, casino games and online poker.

Even with the low tax rates, the Gibraltar government reportedly collected £10.5 million in online gambling tax revenue in 2009. If Chandler’s prediction of no significant defections proves to be accurate, Gibraltar could see that amount expand tremendously, perhaps close to the tenfold increase in the tax rate.

The change apparently comes as part of Gibraltar’s efforts to better conform with the laws of the European Union. According to first minister Peter Caruana, phasing out tax-exempt companies is necessary for this purpose.

“However,” he added, “in order to sustain our successful economic model we must retain a commitment to a very competitive corporate tax model.”

Some of the many online gambling companies headquartered in Gibraltar include PartyGaming, William Hill, and Ladbrokes.