Gibraltar Rise in Taxes to prove costly for Online Poker Sites
This was published 30-12-2010The British territory’s announcement that it will be drastically inflating its taxes on online gambling firms in January, 2011, will probably prove to be very costly for many online poker sites.
At present online gambling companies are paying only 1% tax in Gibraltar with a ceiling of £425,000 but as of next month they will be obliged to pay the same 10% tax rate as what other businesses in Gibraltar pay.
Gibraltar has become something of an “online gambling capital” due to the low tax rate and Poker rooms such as 888poker and PartyPoker have their headquarters there. Online bookmakers William Hill and Ladbrokes also made their move to Gibraltar in 2009 which has resulted in the Treasure of the United Kingdom losing about £12 million per year.
Peter Caruana, Gibraltar’s first minister, said that the tax increase was due to the decision made by the Gibraltar government to confirm to European law. He stated “To comply with EU law, we must phase out the tax exempt company in 2010. However, in order to sustain our successful economic model, we must retain a commitment to a very competitive corporate tax model.”
PartyPoker is owned and operated by Party Gaming from Gibraltar. Party Gaming, who recently announced details of its merger with online gambling giant bwin, stated that it would keep its headquarters in Gibraltar while bwin would continue to operate in Austria. It is not yet known whether or not the news of the tax increase would change those plans but Party Gaming has known about the increase for quite awhile and feels that the tax is still going to be very low.
Although online companies will now pay the standard 10% tax that is paid by other businesses in Gibraltar, they will not be subjected to any Value Added Tax (VAT) and gambling companies will, therefore, still be attracted to Gibraltar.
