The stringent measures adopted by the European Commission and the OECD in order to ensure transparency and the exchange of information among jurisdictions pose a real threat to the development and survival of the Finance Centre in Gibraltar. At a dinner held last night hosted by the Federation of Small Business, and attended by the Governor David Durie and local businessmen, Peter Caruana Chief Minister of Gibraltar and speaker for the evening, explained he had just returned from meetings in London where he had been discussing current plans to bring International Finance Centres into line.

Caruana explained the importance of the survival of the Finance Centre for the local economy stating that it probably accounts for 30-35% GDP. "Almost every business in Gibraltar depends on the continuous success of the Finance centre", he added stating its value and significance to other indirect areas in the community including restaurants, hotels and indeed the Taxi Association. "Everyone has a stake in the finance centre not just the men in grey suits earning a lot of money, but also the 3000 people who have mortgages and many others who are indirectly related to the business".

The Chief Minister said that "few issues had taken more of his time in the last two and a half years after or alongside the Spanish issue." The head of the Gibraltar administration explained the main areas which are currently being looked at and require action include the OECD harmful tax competition report, which includes an EU code of conduct on taxation and the improvement of banking information across jurisdictions, the exchange of information, Transparency, State Aid incentives and the withholding tax on savings.

Already a number of countries have given their committment to meet the requirements expected by the European Commission, to avoid sanctions and the risk of disconnection from the international banking system although the process will be phased out over the next few years till around 2005-7. The Chief Minister was critical of the British Government for not understanding the Gibraltar point of view on several matters affecting the Finance Centre in particular when expecting Gibraltar to comply with certain new requirements which have still not been agreed by other European countries and other jurisdictions and stated that for the last 2 and a half years he had been trying to make the UK realise that this places Gibraltar at a disadvantage. However he stated that "there was no option but to enter into a scheme of remedial action to change tax law and also to modify taxes and administrative practice without turning the lights out on the Finance Centre."

The Chief Minister explained the Government was still involved in constructive dialogue on the issues and had done "considerable preparatory work to be able to give the undertaking to comply and modify the laws to completely enable our system to survive." and that the Government is giving careful consideration to all the implications and is consulting with members of the Finance Centre to establish the consequences of applying the changes required within the local system and the practice and administration of the Finance Centre in order to avoid being black listed.

The event finished with a question and answer session with many members of the Federation asking the Chief Minister's opinion on several business issues. The Federation of Small Business intends to hold similar dinners with key speakers every two to three months.