Major Tax Increase for Online Gaming Companies in Gibraltar in 2011
After leaving the UK to do business in Gibraltar, Ladbrokes and William Hill, two online gaming companies, are now facing a big tax hike in the once low-taxing country. Gibraltar previously offered online gambling companies a 1% tax, but will soon be raising the tax to 10% in 2011, still well below the 13% tax charged in the UK.
According to Victor Chandler, of the gaming company Victor Chandler International, who operates out of Gibraltar, “Nobody will leave,” Chandler told El Pais newspaper, “Although we’ll complain about taxes going up.” This is most likely a common attitude towards the big increase in tax for the coming year.
According to European Union Law, countries must maintain comparable tax rates. Gibraltar, who previously had a substantially lower tax rate than other countries, has decided to comply with the law and even out the playing field. Those who will be affected by the new tax law are about 20 online gaming companies currently operating out of Gibraltar.
The online gaming industry has been thriving despite dire economic conditions; the new tax increase shouldn’t cause any companies to move their businesses out of Gibraltar. Also, Gibraltar is still maintaining one of the lowest tax rates available for online gaming operators, so if a company decided to jump ship they would be hard pressed to find a lower tax rate.
Gibraltar, while likely to keep its current business partners, might also be seeing an increase in business in the near future as certain companies are working on consolidating with other gaming companies. For example Ladbrokes is working on acquiring 888 Holdings currently. If this trend continues Gibraltar will definitely see an increase in businesses in the future.
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