Caruana Criticises Spanish Interference In Gibraltar's Tax Reforms

by Jason Gorringe, Tax-News.com, London

02 June 2003

Responding to comments made by the Spanish Finance Minister Cristobal Montoro last week, Gibraltar's Chief Minister Peter Caruana has criticised Spain's apparent interference in the European Union's investigation of the jurisdiction's tax proposals.

Last week, media reports from the region revealed that, according to Montoro, the Spanish government had submitted its own recommendations to the EU on Gibraltar's tax reforms to ensure that the Rock does not become "a fiscal paradise," and a "a tax haven and a centre for unfair competition in Europe."

"We note with regret and concern statements made by the Spanish Minister of Finance, Cristobal Montoro, in relation to the EC Commission's assessment of Gibraltar's proposed new tax scheme," a Gibraltar government spokesman told the Gibraltar Chronicle, adding: "Sr Montoro is reported to have said that the Spanish Government is collaborating with the EC Commission in its analysis of Gibraltar's tax reform proposals to ensure that Gibraltar does not become a fiscal paradise and does not distort competition in the EU."

The spokesman went on to explain that EU law does not permit representatives from other member states to unfairly prejudice investigations into taxation matters for political reasons. "In this context Sr Montoro's remarks are entirely improper, since they suggest precisely the opposite," the spokesman said.

In other comments made recently, Monotoro has reportedly revealed that both the EU and Spain have described Gibraltar's tax system as "pernicious" in company tax 'code of conduct' documents. He also talked of business tax proposals made by the UK government for Gibraltar which he said have been formally objected to by Spain and were being scrutinised by the EU Commission. Alternative proposals tabled by the Spanish, including exchange of banking information, apparently have OECD (Organisation of Economic Cooperation and Development) support, claimed Montoro.

A statement by the Gibraltar Labour Party on the issue declared that the UK must play a greater role in ensuring Spanish involvement in the EU investigations does not amount to illegal political interference. "Although the views submitted by the Spanish Government to the Commission are not in the public domain, the UK Government must oppose outright any attempt by the Spanish Government to prejudice the chances of Gibraltar's proposed tax reforms being favourably considered and approved by the Commission," party spokesman Nigel Feetham observed.

He continued: "We have been extremely critical of the Gibraltar Government's handling of the tax reform agenda over the last 18 months, but we strenuously defend the Gibraltar Government's right to formulate its own tax proposals and certainly without the Spanish Government creating further confusion into this matter."

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