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Gibraltar Incensed Over U.K. Online Tax

The U.K.’s plans to impose a 15 percent point-of-consumption tax on its citizens who gamble online has raised the ire of officials in Gibraltar.

The gambling commissioner for the British territory, one of the web gambling industry’s preferred licensing jurisdictions and tax havens, criticized the plan as “clearly against the common-sense logic of electronic commerce.”

Steve Buchanan, the head of British bookmaking giant Ladbrokes in Gibraltar, chimed in that the tax would put “a huge and unwanted cost on our business.”

The effect of the tax would be to treat offshore operators the same as those in Britain, whereas operators licensed in Gibraltar pay only a 1 percent tax on revenues capped at US$682,529 a year.

A recent report commissioned by the Remote Gambling Association, an industry trade group, and conducted by KPMG, concluded that any tax above 10 percent would likely fail to achieve its revenue aims, especially if companies are not given leeway to offset costs associated with bonuses and incentives. It could also drive “a very large number of U.K. customers” to the offshore gray market, which conceivably would offer lower-priced products.