| Gibraltar, home of the world’s four largest online gaming companies, is preparing to make sweeping reforms to its corporate tax regime. The reforms are expected to impact the way online gaming and other foreign companies are taxed.
The exempt foreign company regime offered foreign companies a 0% corporation tax rate, while local companies paid a rate of 35%. This system was challenged by the European Union, which argued that it a breach of EU state aid rules by the UK and Gibraltar.
Gibraltar eventually agreed to phase out exempt company status by 2010. Caruana said the territory was planning to introduce a low tax rate for all companies based in Gibraltar within the next 18 months. However, Caruana promised that Gibraltar remained committed to a low corporate tax rate that would remain attractive to large online gaming groups and other foreign companies.
The new tax rate is needed to be confirmed as Gibraltar is still facing EU opposition to its attempts to establish a corporate tax system that differs from that of the UK.
Gibraltar’s case is now before the European Court of First Instance, which is to release a judgment on whether Gibraltar’s links with the UK mean it cannot set its own tax policy. A ruling is expected in September or October this year.
(accountancyage.com) | 
