Gibraltar Reduces Corporate Taxes

Reflecting Gibraltar's strong and continuing economic growth, this year's Budget, presented to Parliament by the Government at the end of June, provides a time-table for the long-awaited introduction of a low corporate tax regime. And while an immediate 2 per cent reduction in the tax paid by tax resident companies – from 35 to 33 per cent – has disappointed the local business community, they and investors will take some consolation from the fact that the Government committed to a timetable to achieve an across-the-board corporate tax of 10 to 12 per cent by 2010.

While the financial services sector had hoped for a bolder approach to the corporate tax question, the Government clearly has felt constrained by the pressures to phase out tax exempt companies by 2010 and the imminent ruling from the European Court on Gibraltar's appeal against the European Commission's ruling on "regionality" in relation to Gibraltar's broader tax proposals.