According to reports in the Spanish media, Spain has officially asked the European Commission to prohibit the implementation of planned business tax reforms in Gibraltar, arguing that they are 'illegal', and 'incompatible with the European Common market'.
Responding to criticisms from the European Union with regard to the Rock's corporate tax regime, the Gibraltar government last July unveiled proposals to replace its company profits tax with payroll and business property occupation taxes, to be topped up with profits taxes of 8% and 35% respectively for financial service and utilities companies. However, shortly afterwards, Competition Commissioner, Mario Monti announced that the proposals would need to be investigated on the astonishing grounds that they constituted unfair State aid to 'a part of the UK'.
This announcement opened the floodgates for other EU member states to release their own assessments of whether the planned tax reforms are permissible under EU law, and Spain, predictably, has decided that they are not.
Citing Spain's El Mundo newspaper as its source, the Rock-based Iberia News service this week condemned the Spanish suggestion that Gibraltar represents the 'only tax haven existing in the European Union', and rejected the suggestion that an 'exodus' of offshore companies has begun in the jurisdiction as a result of uncertainty over the future of its business tax regime.
According to Iberia News, in his recent New Year message, Chief Minister Peter
Caruana: 'outlined...the strong foundation existing within the finance centre
which has maintained its development even throughout the latest crisis'.
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