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Government Is Going Ahead With 'Radical Tax Changes' To Help Gibraltar Finance Centre

Panorama

07 February 2001

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

At a recent meeting of the Gibraltar Bar Council it was agreed what representations they would make to the House of Assembly select committee on constitutional reform. It was disclosed that the government has made office premises available to the Council at Casemates for £133 per month rent and that Companies House are to increase their fees, which will make doing business in Gibraltar even more expensive. This may not unduly concern the legal profession, as they will simply pass on the increases to their clients - but the Government should not allow further increases.

Meanwhile, the Finance Centre Council has been busy considering what the Bar council describes as the OECD "black list" as well as other EU matters that could affect the finance centre adversely. It transpires that investment services passporting is meeting problems.

These are extracts from what Bar Council Chairman Robert Vasquez said at their last meeting -

SELECT COMMITTEE ON CONSTITUTIONAL REFORM
Following the constitution of this Committee after the election I have been invited at my request as Chairman of the Bar to address them on the 6th February 2001.
You will recall that in my report of last year I informed you that the Council had decided that my address should be on the following topics:
• Fundamental rights and the incorporation of the European Convention on Human Rights into the Constitution without dilution of any rights existing under the 1969 Constitution.
• Continued recourse to the Supreme Court on constitutional issues.
• The post of Attorney General and the prosecutorial role.
• Selection of the Judiciary, funding of the Judiciary and generally the independence of the Judiciary.
• The establishment of a permanent law revision and reform commission.

OFFICE PREMISES FROM GOVERNMENT
I was able to report at the last meeting of the Council that the Government had identified premises for use by the Council on the 1st floor of the old Health Centre adjacent to the new Chamber of Commerce premises. The rent would be approximately £133 per month, which together with rates would take outgoings in respect of the premises to approximately £200 per month. This information was not available at the last Council meeting and so a final decision has not yet been taken. I believe that it is essential for the Council to have premises and that the outgoings for these offices are affordable. I intend to recommend to the Council that the Government’s formal offer be accepted once it is received.

FINANCE CENTRE COUNCIL CONSIDERS “BLACK LIST”
The Finance Centre Council continues to meet regularly every month.
The discussions of the Finance Centre Council during the past year have centred on the following:

  • Guildhall - This was a Gibraltar day event, which consisted of a shipping seminar at the Baltic Exchange and a Financial Seminar at the Lloyds Building, as well as several social events. The FCC had some advisory input into its organisation but the event was primarily a Government event.

  • OECD - The Government has engaged the OECD in discussions on three occasions in order to establish their exact requirements. The only way to avoid continued inclusion in the OECD “black list” is to give certain political commitments. The parameters of such commitments are not clearly defined nor are the sanctions for not meeting them. Gibraltar is seeking clarification and is employing a policy of pre-disposition towards compliance unless there is widespread non-compliance by other finance centres of comparable stature and reputation.

  • EU State Aid Rules - The EU has published guidelines on how they intend to apply the rules to tax concessions. They have indicated that Gibraltar tax exempt companies breach the rules. However, there is a de-minimus rule and the State Aid provisions only apply to business activities and not passive investment activities. The Government have not conceded that exempt companies fall foul of the State Aid rules and are arguing the point.

  • Exchange of information - This is another of the international initiatives. Gibraltar does not intend to trail blaze on this subject, but will need to conform as and when other finance centres of comparable stature and reputation conform.

  • International initiatives generally - The Chief Minister has made two recent speeches, one at the Gibraltar Federation of Small Businesses and the other a reference to the Finance Centre in his New Year’s message. It seems clear that the Government of Gibraltar attaches enormous importance to the Finance Centre and it will not shrink from radical tax reforms to safeguard its well being if they become necessary. The Government of Gibraltar’s overriding policy view seems to be to comply with international initiatives, albeit buying time and ensuring the continued success of Gibraltar’s Finance Centre by creative and imaginative thought.

  • Investment Services Passporting - The Government of Gibraltar continue to engage the Treasury in negotiations on this subject. There is apparently a lengthy shopping list, which Gibraltar is asked to comply with prior to achieving passporting on this front. I understand that the negotiations revolve around certain disagreements about the contents of this list.

  • Legislation - Changes to the Financial Services Ordinance are expected, which will include the requirement to licence fund administrators and also company formation agents. Additional powers are also to be given to the Financial Services Commissioner, to include jurisdiction for him to petition for the winding-up of companies. The exact extent of this legislation is not known. The Finance Centre Council was also making representations to the Government of Gibraltar to remove the requirement that only employees of Exempt and Qualifying Companies could apply for Category 3 and 4 statuses and also to remove the residence requirements due to the shortage of housing in Gibraltar.

  • Companies House Fees - An increase is expected in the near future. Transaction led fees will be increased with virtually immediate effect. Annual fees will be increased with effect from the 1st January 2002 to enable practitioners to recover the increase from their clients. Companies House have been asked to consider providing Internet access to licensed company managers, same day searches and longer opening hours.

  • Financial Centre Survey - Jimmy Tipping’s department was preparing a mini survey to be carried out in conjunction with the Finance Centre Council. The Finance Centre Council seeks the co-operation of all those involved in the Finance Centre activities in replying to this survey.

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