Gibraltar was known as the heaven of gambling companies due to the low tax rates applied to gambling revenues but a recent law will increase those taxes tenfold, that is from 1% to 10%.
Though, at first sight, this measure seems drastic, experts claim that gambling companies will not flee Gibraltar in search of better fiscal heavens. Why will that not happen? Because of the VAT exemption. As an article from The Guardian explains, online gambling companies will start paying the standard 10% tax rate as any other business does but will continue to be exempted from the Value Added Tax (VAT), meaning that Gibraltar will remain an attraction for the gambling investors.
“Nobody will leave,” declared Victor Chandler in an interview for El País newspaper, “although we’ll all complain about the tax going up.”
Victor Chandler is the chairman of Victor Chandler International, an old and famous independent bookmaker in the United Kingdom. Active since 1946, this company does much of its business online nowadays, covering a variety of gambling activities including sports betting, casino games and online poker.
Even during the low tax rates period, the Gibraltar government used to collect millions of pounds from the online gambling industry. For example in 2009 they raised £10.5 million as tax revenue. Imagine how much this sum will rocket when the tax rate will increase tenfold.
It seems that this measure comes in line with Gibraltar’s efforts to conform more with the EU legislation. According to first minister Peter Caruana, excluding tax exemptions is necessary for this purpose.
“However, in order to sustain our successful economic model we must retain a commitment to a very competitive corporate tax model,”he added.
Some of the many famous online gambling companies have their headquarters in Gibraltar: PartyGaming, William Hill, and Ladbrokes.