EU deal vital to protect Gibraltar jobs and economy, Feetham tells gambling sector

Without an agreement on Gibraltar’s future relationship with the EU, jobs, stability and the local economy would have been at risk, the Minister for Trade, Justice and Industry, Nigel Feetham, told representatives from the gambling sector.

Mr Feetham delivered an address to the KPMG Gibraltar eSummit at the Sunborn hotel a day after a political agreement was reached on Gibraltar’s post-Brexit relations with the EU.

The agreement seeks to secure border fluidity for both people and goods, which Mr Feetham recognised is vital for the gambling sector that relies on cross-border workers.

Two-thirds of employees in the gambling sector are cross-border workers due to local labour constraints.

Mr Feetham said the agreement protects the economy and that this year’s budget has tax revenues that are “stronger than ever”, with “record-breaking receipts the likes of which Gibraltar has never before seen”.

“But let me be clear: if we had not secured this agreement, all of that would have been at risk,” he said.

“The jobs, our standard of living, the investment, and the confidence in our homeland - none of it could be taken for granted without the stability that this agreement provides.”

“And it’s not just about today. This is about tomorrow. About the next generation. Had we failed to act in Gibraltar’s best interests now, they would not have forgiven us.”

“We had a responsibility to preserve and protect the foundations of our economy, and we have delivered on that responsibility.”

He added that the agreement will safeguard Gibraltar’s future and that there will be no VAT on services.

“We know how critical this is for our licensees, and the Chief Minister has held firm on that point throughout,” he said.

Mr Feetham added that Gibraltar is developing as a multi-jurisdictional service centre and that the ongoing regulatory debate in the UK is of major interest locally.

He said the UK White paper outcomes and other regulatory measures adopted have better protected consumers.

But an over-regulated and over-taxed industry, where customer friction is increased unnecessarily, Mr Feetham said, leaves the regulated industry in a place where it cannot compete with operators who are not subject to proportionate regulation.

Gibraltar online operators pay £750 million in UK point of consumption tax.

He called it “nonsense” to suggest Gibraltar-based operators present a wider tax risk to the UK Exchequer.

“A degree of sense needs to be applied to the debate,” Mr Feetham said.

“The conditions need to continue to be right to encourage a shift by willing operators to the regulated market, and, of course, regulated operators can be viewed as easy targets.”

“We agree with the UK position that more resources are being put into dealing with the black market.”

“We know that this market is still being facilitated by some jurisdictions which issue licences but do little on AML and social responsibility. This risk is real and apparent.”

He described how, in a post-Brexit environment, the EU has taken a restrictive approach on matters such as the location of servers and the right to conduct services into the EU.

“This would immediately give the UK more control of the market through cooperation on regulation via the British family. Malta would remain an EU hub and Gibraltar a UK hub.”

Mr Feetham said it is not as simple as comparing headline tax rates, and matters of substance and where management control of the business is located are important.

“Many operators are multi-jurisdictional, and our own Tax Office has begun to focus on transfer pricing arrangements to ensure that profits derived from Gibraltar are not artificially diverted elsewhere.”

Mr Feetham said Gibraltar-based operators, whether in business or service models, are expected to pay the right tax at the right time.

The Gambling Division has also established an AI working group with some individual operators and the new Gambling Bill is “nearly there”.

Certain aspects of this Bill have been reserved as they are dependent upon treaty negotiation outcomes.

But now with a political agreement secured, Mr Feetham said, the Government will be able to Gazette the Bill very soon and move forward to the debate stage after the Parliamentary summer break.