SHANGHAI - London risks losing the showcase end-of-season ATP World Tour Finals because of the high rate of British tax, world number one Rafael Nadal said at the Shanghai Masters on Thursday.

The Spaniard believes the 50 percent tax on players' appearance fees, winnings and a proportion of their worldwide endorsement earnings could see the glamour event featuring the top eight men being staged elsewhere unless the law is changed.

"It is really tough what is happening today in the UK with the tax. There are a lot of things that are really positive. This (tax) thing is probably really negative," he said after losing in the third round to German Florian Mayer.

"What I believe in my heart, is that London is a fantastic event. There's a full crowd at every match, a fantastic stadium. But London is not the only city in the world," he said.

The five-year contract for the ATP World Tour Finals, staged at the 02 Arena, comes up for renewal in 2013 but Nadal indicated that growing discontent could see players pushing for the event to be moved to a more favourable tax environment.

"The tax regime from UK is complicating a lot of things because to go and play at Queen's, the problem is not to win. The problem is I can lose money because I go there.

"I play for one week, and they take out money from my sponsors. That's a lot," he said of the Wimbledon warm-up event he has decided to skip next year in favour of playing at Halle.

"I'm going play at Wimbledon. I'm going to play in the World Tour Finals. So that is a lot of weeks, a lot of tax. It is becoming more and more complicated to play in the UK at the moment," he said.

Tax change

However, a change to the tax regime could help London renew its contract for the ATP finals, added the Spaniard.

"So (if there is a tax) change, the chances of keeping the World Tour Finals in London are going to be very, very high," he said.

Nadal dismissed suggestions in the British media that he had decided to play the Halle event in Germany instead of Queen's because he had been offered a higher appearance fee.

"For the last four years, I have played at Queen's. So we thought it is the right moment to change. I am not changing because Halle is paying me more money than Queen's. That's not the reason," he said.

Wimbledon chief executive Ian Ritchie called on the government earlier this year to change the tax laws or risk Britain losing some of tennis's marquee events.

Government rules state that sportsmen and women competing or even just practising in the UK are taxed a proportion of their income from endorsements and sponsorships even if those deals have nothing to do with Britain.

The rules are the reason triple Olympic champion sprinter Usain Bolt has stayed away from the London Diamond League meetings and there are also fears they could affect some of the country's smaller golf tournaments.