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.
Brussels thinks that these changes could give Gibraltar companies an unfair advantage over other British businesses, in effect giving them illegal state aid subsidies. This is – notably – because total tax liability would be capped at 15% of profits or £500,000, whichever is the lower. If a company makes no profit, it would have no tax liability.