Gibraltar's Chief Minister Confirms Fear Of Exodus Remains

Panorama

05 September 2001

This story is reproduced by kind permission of Panorama at: http://www.panorama.gi

The chief minister has now confirmed the essence of last week's Panorama Exclusive by Joe Garcia to the effect that very radical tax changes are to be introduced for companies. There would be no tax discrimination between offshore and local companies.

The plan is to try and salvage as much as possible of the finance centre once the tax exempt and qualifying companies disappear as we know them today. Company tax, which is as big as 35%, is to be reduced to 8%-12% in an attempt to keep some of the companies in Gibraltar.

A procession of finance centre figures have been parading before the chief minister so as to try and find out what tax level would keep them in Gibraltar. Qualifying companies are on a tax scale that starts at nil. They are generally subsidiaries of overseas companies, and employ local staff.

If one such company now pays, say, 1% tax, and this draws £1 million for the government, if a number of such companies end up paying more tax than at present and stay here, the amount of income for the government could help balance out what could be lost by others leaving the Rock.

The tax-exempt company pays no tax at all and are known as 'brass plate' companies as they do not operate locally. If they leave they would affect local firms which administer such companies, from small enterprises to bigger international corporations. Legal offices also have staff looking after hundreds of tax-exempt companies, which would also be affected.

It remains to be seen if companies will be prepared to pay more to stay in Gibraltar, or if there will be an exodus to other jurisdictions where they can carry no tax.

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