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Gibraltar offers new 10% flat rate corporate tax rate
International Tax Review posted at
http://www.internationaltaxreview.com
June 18, 2009
Gibraltar has used a European Court of Justice ruling to establish a new 10%
flat corporate tax rate for domestic and international companies.
The new rate will be introduced on July 1 2010 following the
ruling
late last year which stated that Gibraltar could set its own tax rates
despite being a UK territory.
Gibraltar previously had a 30% rate for corporations located there, although
the majority took advantage of the tax system and paid an effective rate of
0%.
The new Gibraltar corporate tax rate forms part of a wider reform to the
country's tax system which includes the introduction of three taxes
applicable to all companies in Gibraltar: the registration fee, payroll tax
and a business property occupation tax, with a cap on liability to payroll
tax and business property occupation tax of 15% of profits.
The European Commission vetoed these reforms in 2004, but an appeal was
lodged and the ECJ granted Gibraltar power over determining tax rates.
The new rate is expected to enhance Gibraltar's status within the
international community after it was targeted for its low tax status. In
April, Gibraltar was placed on the OECD
grey
list
of jurisdictions that had agreed to the OECD exchange of information
standard, but had failed to fully implement it.
So far, Gibraltar has only signed one tax information exchange agreement (TIEA),
with the US. However, it is expected that it will soon sign similar
agreements with the UK and France.
A consultation document on the reforms had been expected to be released next
month, but this has been pushed back to September.
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