Independent British territory of Gibraltar will soon lose its special status in the world of European gambling. As far as you may know, Gibraltar has always been the most lucrative base for numerous UK internet gambling companies due to its low taxes. 1% was absolutely nothing compare to 15% gross income tax in the United Kingdom and other European countries. However, everything will change drastically next year. Tax rate for all gambling-related companies will equal 10% starting from January,2011. Why is it happening and who is gonna suffer from such an increase? Let’s find out more about Gibraltar new gambling laws below.
Issuing of internet gambling licenses is the major source of income for tiny Gibraltar. Gibraltar Regulatory Authority issued licenses to such prominent and well-known gambling operators as Ladbrokes, Belle Rock Entertainment, 888 Holdings, Victor Chandler and Party Gaming. 1% tax rate brought over €12 million to the Gibraltar budget in 2009. Gambling companies based in Gibraltar were successful even in the hard times of economic recession due to the tiny tax rate of 1%.
Such situation satisfied everyone actually except for the governmental bodies. Gibraltar could attract more and more businesses that paid taxes and companies could operate legally paying the lowest rate ever. However, it turned out that such a low taxation doesn’t comply with European Union laws. According to them, any industry in EU countries should be taxed at a comparable rate. 1% was too low compare to all other European Countries where the gambling tax exceeded the record of 10%. Sounds strange,right? Looks like European Union doesn’t respect the principles of a competitive free market that allows customers to obtain goods for lower prices.
Whatever the reasons of such a decision, UK internet gambling companies will certainly be the first to suffer from it. However, according to the statements made by their representatives, nobody is willing to relocate. Even the elevated 10% tax is better than 15% gross income tax in Great Britain, an what’s more, Gibraltar is not going to introduce VAT there despite of all the pressure.
Gibraltar economy is also likely to suffer from the tax increase. Right now, this tiny island can boast the lowest unemployment rate of 2% compare to 21% in the neighboring Spain. Increase of the gambling tax will mean less profits for companies and, therefore, personnel reduction. Thousand of Gibraltar citizens will become jobless because of the strange European Union demand.
UK internet gambling companies licensed in Cyprus will also experience certain difficulties. The problem is that Cypriot government tries to ban internet gambling altogether and this document is currently reviewed by European Commission. Such talks were followed by thorough investigation of all income reports submitted by gambling companies. And we can only hope that all these changes will not effect online players in any way. Read our site to be tuned of all the latest events in the gambling universe.