Gibraltar Scope Of Corporation Tax
tax was levied under the Companies (Taxation and Concessions)
Ordinance. Ordinarily resident companies pay income tax on their
worldwide income. As applied to a company, 'ordinarily resident'
a company the management and
control of whose business is exercised in Gibraltar; or
a company which carries on
business in Gibraltar and the management and control of
which is exercised outside Gibraltar by persons ordinarily
resident there within the meaning of the Ordinance; or
in the case of an investment
company (ie whose income mainly arises other than from the
gains or profits derived from any trade, business or
employment), which is domiciled anywhere outside Gibraltar,
where control of the company, through shares or voting
powers, is exercised by persons ordinarily resident in
company was defined as: a company which is incorporated in Gibraltar
(whether or not exempt), owned by non-residents of Gibraltar and
managed and controlled by directors who reside and hold board
meetings outside Gibraltar.
company paid Gibraltar corporation tax only on its income derived
from or remitted to Gibraltar.
Gibraltar Corporate Tax Rates
Taxable profits were charged with corporation
tax at 35%. From the 1999/2000 tax year there was a scale of lower
rates between 20% and 35% for companies with profits between £35,000
or less and £105,000, providing 80% of turnover is from trading
Gibraltar Calculation of Taxable Base
corporation tax was normally assessed for income arising in the
previous fiscal year.
expenditure needs to be incurred 'wholly and exclusively' for
the business; however, mixed private/company expenses can often
The rules for
depreciation of business assets were as follows:
for fixtures and fittings,
plant and machinery acquired after 30/6/87: 15% on the
ditto, acquired before
30/6/87: 25% on the reducing balance;
office machinery: 20% on
the reducing balance;
industrial buildings: 4%
of cost per annum;
ships: 10% of cost per
capital payments for
leasehold premises: over the period of the lease, up to
12 years maximum.
above w.d.v. count as taxable income, but balancing allowances
are available if new, cheaper equipment replaces obsolete
Gibraltar has no double tax treaties, relief is given in respect
of UK tax paid on income also chargeable in Gibraltar, and to a
lesser extent on similar Commonwealth tax. By concession, other
foreign tax paid on remitted income is allowed as a deduction.
Under the EU Parent/Subsidiary Directive
90/435, a Gibraltar company holding more than 25% of the shares
of another normally-taxable EU company does not pay tax on
dividends received; similarly a tax-paying Gibraltar company
holding more than 25% of the shares of another EU company does
not have to deduct withholding tax on dividends paid to that
other company. Qualifying and tax-exempt companies are not
covered by this rule.
receipt of Development Aid, or active in Tax-Deductible Property
Zones may be entitled to further allowances.
In the 2005
budget, Gibraltar extended unilateral tax relief provisions to
There is a gaming
tax set at 3%; in the 2005 budget the cap on the gaming tax was
increased to £425,000 with the minimum payable remaining at 20%
of the cap figure.
Taxation of Trusts
Trust income is
exempt from tax under the Income Tax (Allowances, Deductions and
Exemptions) Rules 1992 if:
- the trust is created by
or on behalf of a non-resident person; and
- the income either accrues
or is derived outside Gibraltar, or in the case of income
received by a trust would, if it had been received directly
by the beneficiary, not be liable to tax under the Income
Tax Ordinance; and
- except in the case of a
trust created before 1/7/83, the terms of the trust
expressly exclude residents of Gibraltar (as beneficiaries).
NB: Interest income
received from a Gibraltar bank is normally exempt from taxation.
Gibraltar Filing Requirements and Payment of Tax
issued by the Commissioner of Income Tax; 50% of the tax payable is
due within three months of the issue of the assessment, and the
remainder within six months, or by 30th April in the year of
assessment, whichever is the later.
Gibraltar Withholding Tax
companies must generally deduct withholding tax at the standard
rate from dividends paid out; if the tax deducted is more than
the company's mainstream tax bill, the excess is payable; if the
tax deducted is less than the company's mainstream tax bill, the
difference is carried forward and set off against any future
2005 budget, the following changes were made: