Gibraltar's deputy chief minister Keith Azopardi told a gathering in London he expected the package of reforms to be approved by the EU, the FT reported today.

Pressure on the UK colony to reform its policies originally came from the OECD in its drive to eliminate harmful offshore tax practices and improve transparency.

It was stepped up when the European Commission launched a state aid inquiry into the planned reform of Gibraltar's company taxation laws.

The main point of contention is the concession granted to offshore companies that allows them to pay no tax for 25 years, while local companies are subject to tax at a rate of 20% to 35% on profits

The reforms entail the abolition of company profits taxation, replacing it with a payroll tax, (£3,000 per employee), and a business property occupation tax. Financial services and utilities would face top-up taxes on profits at 8% and 35% respectively.