UK Trade Secretary Defends Gibraltar's Financial Sector

by Jason Gorringe, Tax-News.com, London

12 June 2003

UK Trade and Industry Secretary Patricia Hewitt has this week defended Gibraltar's finance industry, arguing that it complies with both OECD and IMF requirements, in addition to being up to GAFI standards.

Hewitt was in Madrid this week to meet her Spanish counterpart, when she told reporters that all of the aforementioned organisations have expressed satisfaction with the way in which Gibraltar conducts its financial services industry. The minister added that Britain took its responsibility as Gibraltar's competent authority seriously, and stated that action would be taken if there was any evidence of "illegal activity" taking place within the jurisdiction in relation to financial services.

However, according to reports, Ms Hewitt declined to comment on the Rock's tax reforms, which are yet another source of friction in Anglo-Spanish relations concerning Gibraltar. Recently, Spanish Finance minister Cristobal Montoro revealed that the Spanish government has submitted its own list of recommendations regarding the future tax status of Gibraltar, which it has long complained is a harmful 'tax haven'.

Montoro's comments caused a political storm in the jurisdiction in the run up to the bilateral talks with UK Foreign Office Minister Denis MacShane. A Gibraltar government spokesman said last week: "Sr Montoro is reported to have said that the Spanish Government is collaborating with the EC Commission in its analysis of Gibraltar's tax reform proposals to ensure that Gibraltar does not become a fiscal paradise and does not distort competition in the EU." Chief Minister Peter Caruana contended that such a move by the Spanish was illegal, as EU rules did not permit interference in such matters by member states, leading the spokesman to add: "In this context Sr Montoro's remarks are entirely improper, since they suggest precisely the opposite."

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