Gibraltar readies 10% rate of tax

The government of Gibraltar is in the final stages of negotiating the implementation of a 10% standard corporate tax rate for both domestic and international companies investing in the offshore center.

A Budget announcement at the end of this month is likely to see the abolition of an international tax exempt regime which was introduced in 1967.

The regime has meant most international companies with a presence in Gibraltar pay a 0% corporate tax rate. However, the newly proposed rate, scheduled to come into effect from July 2010, will see all companies paying a 10%.

According to James Tipping, finance center director for Gibraltar, the proposal is in the latter stages of being drafted by a working group committee.

He said the phasing out of the 0% regime for international companies will lead to a fairer corporate tax system.

‘You can’t have a discriminatory tax system,’ he said.

He confirmed no new international companies wanting to invest in Gibraltar have been permitted to enter under the terms of the 0% regime, in anticipation of the new system taking effect.

Tipping rejected suggestions the measure would lead to an exodus of international financial services firms which currently account for 30% of Gibraltar’s GDP.

‘No companies have said they’re leaving…the government has been in close consultation with many of these. We’re in a position where we can pick up the phone and have thee discussions.

‘If people want to pay 0% tax, then they can go somewhere else. People need to realise they have to make a contribution,’ he said.