Gibraltar is a Crown colony, connected by a narrow isthmus to southern Spain. The Gibraltar government is responsible for defined domestic matters, whilst the UK is responsible for Gibraltar's defence, foreign affairs and internal security. The Island has its own legal system, based on British common law but with its own statutes, known as ordinances. Some English Acts are extended to Gibraltar by Order in Council, others are enacted as ordinances and other areas are applied directly by the Gibraltar House of Assembly. Gibraltar is treated as a part of the member state of the UK for EU purposes and is included for all matters with the exception of the Common Customs Tariff, Common Agricultural Policy and Harmonisation of Turnover Taxes (notably Value Added Tax). Gibraltar's Companies Ordinance is based on the English Companies Act 1929. The incorporation of a Gibraltar company is usual in order to apply for a tax exempt qualifying company. The Income Tax Ordinance governs the taxation
