Home / Poker News December 2008 / Gibraltar to retain 15% corporate tax rate
Gibraltar to retain 15% corporate tax rate
Posted by: James Carter - Tue, 2008-12-23 12:18
If you were wondering why Gibraltar was such a hot destination for businesses (online and otherwise) ponder no longer. Among the attractions that the tiny British territory has for enterprise is the meager 15% corporate tax rate on profits. This fact alone has attracted numerous businesses, among which online gambling and online poker operations took up a prominent place.
The reduced corporate tax rate is a result of a proposal by Peter Caruana, Gibraltar’s Chief Minister and dates back to 2002 when the measure was launched. The European Commission has attacked the fiscal privileges provided by Gibraltar, alleging that it provided unfair advantages for companies based in the territory over those based in the UK, and arguing that from a fiscal perspective, these companies should be treated in a similar fashion to their UK based counterparts. Gibraltar’s counter-argument in the matter was that its constitution, adopted in 1969, clearly outlined the fact that the territory would enjoy fiscal autonomy, and therefore UK taxes would not be compulsory under the legal framework.
Despite the apparently obvious nature of the case, the European Commission has taken a decision against Gibraltar in 2004.
In a recent ruling however, an EU court has voided the EC’s 2004 decision, dismissing the links between the UK’s and Gibraltar’s fiscal systems on which it was based. According to the EU court, Gibraltar’s constitution clearly defines the autonomy of the tiny territory’s fiscal and political status, and UK regulations can therefore not be applied there. The court’s ruling was based on a similar dispute regarding The Azores’ fiscal independence from Portugal, which had occurred in 2006 and in which a similar conclusion was reached.
This way, Gibraltar will be able to legally maintain its tax enticement for online gambling and poker companies many of which had been following the proceedings with increasing anxiety. The British territory of Gibraltar hosts some of the biggest online gaming companies, like PartyGaming,
Mansion Poker,
Pacific Poker etc, and it is estimated that around 12% of the territory’s total population is employed in online gaming and online gaming related activities.
