Territory awaits EC decision on tax regime.
Gibraltar’s Chief Minister remains confident that the territory will maintain a tax system independent of the UK and is ploughing ahead with plans for a corporate tax regime of between 10% and 12%.
The European Commission has been arguing that Gibraltar should not be permitted to have a different corporate tax regime than the UK.
It also said that a series of tax proposals by Gibraltar broke EU state aid rules.
A ruling by the European Court of Justice is expected imminently, following lengthy delays.
But Chief Minister Peter Caruana told Insurance Times: “We are not expecting any shocks. We’re entirely confident.”
But even if the ruling went in Gibraltar’s favour, Caruana said it would continue to move towards a low-tax instead of a no-tax regime.
Gibraltar has been phasing out its 0% tax rate for foreign companies since 2006.
It plans to implement a new regime, which will see a corporate tax rate of between 10% and 12%, by 2010.
Caruana said: “One of the choices we made is that we don’t want Gibraltar to be constantly swimming against the tide in international consensus.
“We want Gibraltar to be a competitive finance centre with a competitive finance system, but we don’t want to be constantly on the edge of what the rest of the world thinks is legitimate.”
The government also plans to bring corporate tax for domestic companies on par by 2010. Initially, it planned to reduce this tax from 33% to 30% for this year.
But in anticipation of 2010, Caruana announced in his budget earlier this month that he would accelerate the reduction of corporation tax for domestic businesses from 33% to 27%, effective from the start of Gibraltar’s tax year on 1 July.
