Gibraltar Tax Reform Model Nearing Completion, Says Report

by Jason Gorringe, Tax-News.com, London

25 March 2002

The Gibraltar Government is readying to implement tax reforms following pressure from the European Union on state aid, according to maritime business news service Lloyds List.

In a report released last week, Lloyds List suggested that as the EC investigation into Gibraltar's exempt and qualifying company legislation continues, the Rock's authorities are in the process of finalising a new tax model which, they hope, will comply with international tax initiatives while preserving as far as possible the current fiscal benefits.

The news service revealed that key players in the finance sector believe that the new rules will have no significant impact on existing business, and Ministers believe that the as yet unannounced package is 'watertight'.

'There are always winners and losers in these things, but I think the model that has been devised meets both international criteria and the commercial requirements of the finance industry,' a senior source is quoted as saying.

Although some believe that the new laws affecting exempt and qualifying companies could be in place as early as July, there are fears that the current political climate surrounding Gibraltar could problematise the introduction of new legislation. The UK Government has hinted that it will withdraw support for the jurisdiction's low tax regime if it refuses to accept shared sovereignty with Spain.

However, when questioned in the House of Commons last week, Prime Minister Tony Blair reportedly told Opposition leader Iain Duncan Smith that there would be no repercussions for Gibraltar if it rejected Anglo-Spanish proposals, which contradictory statement has merely served to confuse the issue further.

According to Lloyds List, however, the political uncertainty surrounding the Rock has not adversely affected interest in the financial sector. The Gibraltarian Department of Trade and Industry confirmed this, announcing that over 5,000 companies were incorporated in Gibraltar last year, which represents the second best yearly result in the last decade.

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