Gibraltar’s egaming sector suffered a potentially damaging blow this week when it was told it would lose its tax-free status, leading to fears of an egaming exodus from the island.
The UK government has formally accepted the European Commission recommendation to abolish the Exempt Company tax regime, whereby companies in Gibraltar pay a small annual fee instead of company tax, in Gibraltar by the end of 2010.
The European Commission said the scheme amounted to illegal state aid from the UK, of which Gibraltar is an overseas territory.
John Anderson, chief executive of Gibraltar-based 888.com, said it was likely to have a damaging effect on the island’s egaming industry.
“It will figure in people’s minds when they are assessing domiciles, and it could impact Gibraltar significantly,” he said.
It is believed the Gibraltar government will introduce an EU sanctioned low tax structure to replace exempt company tax.
But Anderson warned if the tax rate was set too high, it could lead to companies leaving the island.
“If there is an identical tax rate in Gibraltar as in the UK, then you can foresee a lot of UK-based companies moving back,” Anderson said.
The UK acceptance means from 19 February 2005 the number of beneficiaries of the scheme is capped at 31 December 2003 levels.
This means new companies will only be eligible for the scheme as existing companies leave it.
source : egaming review magazine
