PRESS RELEASE
No: 249/2024
Date: 10th April 2024
Update on Tax Strategy
HM Government of Gibraltar remains committed to its tax strategy. The focus is primarily on ensuring that companies operating in the regulated financial sectors contribute their fair share of taxes to our community. This includes collaboration across agencies to ensure compliance with tax obligations.
Several key initiatives announced by the Minister for Trade and Industry, Nigel Feetham KC MP, in Parliament are progressing as planned.
Firstly, HMGoG are bolstering the Tax Office’s expertise by recruiting two tax specialists by June 1, 2024. Their knowledge will greatly aid in policy implementation. Secondly, a Memorandum of Understanding (MoU) between the Income Tax Office and HM Government of Gibraltar’s Gambling Division has been finalised and is now fully operational. Additionally, HMGoG are finalising another MoU with the Gibraltar Financial Services Commission to facilitate information sharing and uphold standards of propriety and good conduct in the licensed sectors.
Recent statistical data indicates that:
• The financial sectors have accumulated significant tax losses in Gibraltar in excess of £2.1 Billion.
• Some large companies in the financial sectors are reporting small profits in comparison to significantly higher profitability at group level.
• A high number of operators are failing to meet their tax filing obligations.
• A large part of the corporate tax revenues collected is being contributed only by a small number of regulated firms.
• There is not always a correlation between the value that firms recognise they obtain from being licensed and regulated locally and the economic value to Gibraltar in terms of their contribution to tax revenues.
• In cross-border situations, Gibraltar is competing for tax revenues with other jurisdictions, with pressure from foreign tax authorities to receive a higher proportion of corporate tax revenues currently attributed to Gibraltar-based operations.
Minister Feetham has highlighted these concerns in Parliament.
The Minister for Trade and Industry, Nigel Feetham KC MP, said: “Taxes are the lifeblood of our nation, funding essential social services, healthcare, education, and sustaining the public sector. However, when companies in regulated financial sectors report staggering losses while failing to
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contribute economically through local employment and PAYE taxes, or report minimal profits locally whilst generating high levels of profitability at group level, it threatens the foundation of our fiscal sustainability. The collection of taxes is essential for our continued prosperity. This not only jeopardises current tax receipts but could potentially write off tax revenues for years to come, hindering our ability to invest in the future of Gibraltar. I have said it on a number of occasions (including in Parliament) that we cannot carry the reputational risk of a company being licensed and regulated in Gibraltar but none of the economic benefit. This poses a clear and present risk to Gibraltar’s macro-economic interests if these issues are left unaddressed.”
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