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Minor amendments will be required of Gibraltar's Income Tax legislation to bring it in line with international best standards as assessed by the European Union's Code of Conduct Group of Business Taxation, Gibraltar's Chief Minister Fabian Picardo has said.
Speaking to reporters in Brussels, Picardo was quoted by the Gibraltar Chronicle as saying: “I believe we are literally at the stage of final tweaking of words in an amendment that may affect one or two sections of the Income Tax Act."
“I therefore expect that we will very shortly be putting a final draft to officials in the Code Group for an informal view. From the indications that we have, it will likely be a favorable one."
The Code of Conduct Group's assessment follows shortly on the heels of scrutiny of the Jersey, Guernsey and the Isle of Man's zero-ten corporate tax regimes, which concluded with separate but identical rulings that their deemed distribution provisions were "harmful." The provisions in question ensure that tax is paid on individuals' holdings in profit-making companies as their respective holdings appreciate. Under the regime, a "deemed distribution" is presumed by the government and individual income tax is liable on the amount irrespective of whether a distribution has in fact been disbursed to the shareholder.
It is anticipated that after making the changes deemed necessary to its tax regime, Gibraltar's corporate tax framework – as in the case of Guernsey, Jersey and the Isle of Man – will be formally endorsed by the Code of Conduct Group and subsequently European Finance Ministers, but not before, Picardo anticipates, a "politically-motivated" challenge from Spain.
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