Caruana Confident Gibraltar Can Keep Exempt Company Status

by Jason Gorringe, Tax-News.com, London

10 September 2004

Gibraltar’s Chief Minister Peter Caruana is “quietly confident” that the jurisdiction’s Exempt Company regime will be allowed to continue whilst the European Court considers the validity of the jurisdiction's new fiscal regime under regional selectivity rules, the Gibraltar Chronicle has reported.

Speaking on his return from Brussels where he held talks with officials at the Competition Directorate General, Mr Caruana stated that the EU Commission department was willing to allow Exempt Company status to remain for the time being, a view he noted is supported by the majority of the Commission’s departments.

Caruana warned that failure to reach an agreement on interim arrangements would be “hugely disruptive, threatening and challenging,” to the economy of the Rock.

Earlier in the year, the European Commission decided that Gibraltar effectively constituted part of the UK and therefore new tax measures introduced as part of the jurisdiction’s offshore regime must be dismantled.

The new measures abolish the 35% corporate tax rate, replacing it with a payroll tax and a business property occupation tax - both capped at 15% of profit.

The Gibraltar government is attempting to contest the decision in the European Court of Justice.

“At the end of the day Gibraltar cannot de facto be deprived of its day in court through administrative action and we are hopeful that within the next few weeks a deal will be approved by the Commission at large,” observed the Chief Minister according to the Chronicle.

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