4Flush.com – Recent confirmation that the United Kingdom plans to go ahead with plans to increase the tax assessment against remote online gambling sites serving UK bettors has many of the targeted online sites up in Gibraltar, the “Rock” territory near the entrance to the Mediterranean sea that juts out from Spain’s southern coast. Tiny Gibraltar, all 2.6 square miles of it, has been a British protectorate for centuries.
These days, in addition to being the home of a feisty, feral pack of macaque monkeys, the so-designated British Overseas Territory is also home to a feisty, feral pack of British online gambling firms who relocated their corporate offices their to take advantage of a 1% online gambling revenue tax rate set up several years back by Gibraltar’s mostly autonomous government.
That tax shelter arrangement has resulted in quite the windfall for the major British gambling firms who’ve rented office space there, including bwin.party, William Hill, Ladbrokes, Betfair, Mansion, Stan James, Corals and others among the 25 or more firms incorporated there. When one considers that the domestic tax rate in the United Kingdom on gross gambling revenues is 15%, it’s obvious how huge and profitable the arrangement has been. That 1% figure is also a maximum, since the actual cap is £425,000 (about $660,000), meaning that anything these companies rake online annually over $66 million is tax-free. Overall, the Gibraltar arrangement is really more like a 0.1% tax for the industry’s biggest players.
Such a gross inequity is why the United Kingdom is changing its policy, years after it opened the doors to online gambling in general. There’s been a general shift among nations worldwide to demand that gambling and tax revenues be based on the residency and citizenship of the gamblers, rather than the location of the gambling sites, and that’s a battle that’s been going the way of the various jurisdictions as well.
Back in the middle part of the last decade, there were numerous European Union-based legal scuffles over online gambling matters, since online commerce was among the trade areas specifically covered by EU trade agreements. Most of the EU countries responded by saying, “Tough, we don’t care.” In a general situation very reminiscent of the United States’ ongoing World Trade Organization skirmish with the tiny island nation of Antigua and Barbuda, EU nations lined up to wall off their potential gambling customers from the rest of the EU and world.
