Gibraltar Officially Announces New Tax Package

by Jason Gorringe, Tax-News.com, London

30 July 2002

The Government of Gibraltar has now issued a press release giving further details of the package of reforms it intends to make to the tax system as from 1st July 2003. Says the government:

'The announcement of the tax package follows months of internal consultation and discussions to take account of the impact of various international initiatives. The Government of Gibraltar also had a domestic electoral commitment to introduce fiscal reforms and is committed to a policy of achieving lower levels of personal taxation.

'The details of the package were revealed in a recent Ministerial Statement to the House of Assembly (Gibraltar's parliament).

'The principal measures will be:

(1) the abolition of tax on profits for all companies (except financial services providers and utility companies);
(2) subject to agreement with the EU, the introduction of an 8% profits tax rate for financial services providers;
(3) the introduction of a payroll tax that will be charged on a fee per employee;
(4) the introduction of a business property occupational tax akin to the property rates system;
(5) the capping of the total liability to the payroll tax and business property occupational tax to a sum equal to 15% of profits. Companies will therefore pay the assessed liability or a sum equal to 15% of profits whichever is the lower;
(6) the introduction of a small annual companies registration fee of £300 (if the company has income) or £150 (if the company has no income) inclusive of current annual return fees.

'These reforms will substantially benefit all those companies currently paying 20% or 35% corporate tax which trade or employ persons in Gibraltar. The cost of doing business will be reduced with the hope that employment will be created as a result.

Deputy Chief Minister Keith Azopardi said:

"These reforms will deliver benefits to local trading companies, preserve Government revenue and maintain the competitiveness of the finance centre through the abolition of tax on profits for the vast majority of registered companies. Gibraltar will continue to be an attractive place from which to do business, and for private client investment in financial services."

These tax reforms follow on from the various international endorsements of Gibraltar's regulatory standards - most recently from the International Monetary Fund, which described Gibraltar as being "at the forefront of the development of good practices."

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