Company Tax in Gibraltar is to be reduced from 22 per cent to 10 per cent with effect from 1 January next year. The new tax regime, which has been on the cards for several years – but whose introduction was delayed in part by a protracted legal clash with the European Commission over the problematic question of ‘State Aid’ – will also abolish the current tax exempt company arrangements.
The reduction – details of which are set out in proposals for a new, amended and consolidated Income Tax Act – ends the historic distinction between “onshore” and “offshore” business which, in the past has proved particularly attractive to international investors.
“Together with the tax information exchange agreements being entered into by the Government, and Gibraltar’s full integration in the EU and compliance with EU financial services regulation, money laundering and co-operation rules, the new Tax Act completes Gibraltar’s 14 year transition from tax haven to mainstream European financial services centre,” Chief Minister Peter Caruana told a local newspaper.
The lower taxes will ensure that Gibraltar will remain internationally competitive in terms of its tax system.
The texts of the intended Bill and of the extensive explanatory memorandum which accompanies it have been published to allow for written comments between now and ending 23 July. The Government intends to formally gazette the Bill in mid-August, and it will be presented to Parliament in October.
As other European economies falter, the continuing growth of Gibraltar’s finance sector has forced the Rock’s Financial Services Commission to move to from the offices in Europort which it has occupied since its inception 14 years ago to larger premises in a new prestigious block nearby.
In the past decade the numbers of staff employed by the FSC has risen from 12 to more than 40 – to keep pace with both the growing legislative measures and regulations emanating from the EU as well as the “significant increase in services provided by the financial sector”, according to Markus Killick, the Commission’s CEO.
“We ran out of space some time ago and as our forward plans are for increasingly open-plan offices, when the stage was reached where we could quit our old lease, we took the advantage to move.”