Gibraltar's Chief Minister Unveils Plans To Save Finance Centre

by Jason Gorringe, Tax-News.com, London

04 April 2002

The Gibraltarian Chief Minister, Peter Caruana, was in London this week for talks with the UK government on how to rescue the jurisdiction's financial centre in the face of growing international pressure, according to reports.

Having made a commitment to the Organisation for Economic Cooperation and Development (OECD) to reform 'harmful tax practices', the Rock will clearly be obliged to make some changes to the way in which its offshore financial centre is run. However, it is the extent of these changes which remains as yet undecided.

In its letter of commitment to the OECD, the Gibraltarian government made it clear that although it desired a mutually acceptable compromise with the multilateral organisation, practices which were considered 'not harmful' by the jurisdiction's authorities should not meet with objections from the OECD.

According to the Panorama news service in Gibraltar, the proposals under discussion this week were for a sweeping reform of the corporate taxation regime. The Chief Minister reportedly unveiled plans to introduce a low tax brand for all companies located on the Rock, whether offshore or local. In this way, it is thought that the region could retain its low tax reputation, while still appeasing the OECD.

Although these measures, if adopted, could mean that offshore companies are expected to pay slightly more in taxes than they do at present, experts have suggested that the new levels are unlikely to be unacceptable.

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