Online Casino Continues to Enjoy Tax Haven
As part of the attempt to further enforce the online casino regulation, Gibraltar-based online casinos underwent a tax threat by the European Union, which has been working to abolish Gibraltar’s exempt company tax regime. As most online casino buffs and semi-buffs know, Gibraltar is an off shore tax haven for online casinos, and hosts many who share the same line of business.
Online casinos are all dotcom businesses, and thus find it convenient to establish their headquarters in the low tax jurisdiction of Gibraltar. This has provided the companies with a significant edge on other sectors because they have not had to pay the UK corporation tax rate of 30%, creating massive savings for shareholders. But these benefits were frowned upon by the European commission.
The EC had a problem with the fact that taxes in Gibraltar were based on payroll and the occupation of business premises, which meant that businesses would be unlikely to pay any tax liability. The commission said that by 2010 Gibraltar would have to abolish its exempt company tax regime, possibly meaning that online gaming groups based in Gibraltar could find themselves paying corporation tax of 30%. The story has a happy end, for the online casinos that is, because this week news came in that the EC had removed the threat of increased taxation by upholding the self-governing territory’s autonomy to control its own taxation under its 1969 Constitution.