This country-specific Q&A provides an overview to tax laws and regulations that may occur in Gibraltar.
It will cover witholding tax, transfer pricing, the OECD model, GAAR, tax disputes and an overview of the jurisdictional regulatory authorities.
This Q&A is part of the global guide to Tax. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/tax-2/
How often is tax law amended and what are the processes for such amendments?
Gibraltar laws are contained in Acts of the Gibraltar Parliament. The last wholesale review of the tax legislation in Gibraltar was carried out in 2010 through the introduction of the Income Tax Act 2010 (ITA). Amendments to the ITA can take place at any time by way of the presentation of a Bill to be debated and passed at the Gibraltar Parliament. The ITA, however, provides for amendments to be introduced by way of regulation, and small-scale, operational changes to the ITA are introduced this way.
What are the principal procedural obligations of a taxpayer, that is, the maintenance of records over what period and how regularly must it file a return or accounts?
Tax returns must be filed annually, nine months after the financial year end of a company. For accounting periods ending on or after 1st January 2016, all companies registered in Gibraltar (as well as any other company with income assessable to tax in Gibraltar) are required to file a tax return. Previously, only companies with income assessable to tax in Gibraltar were required to file a tax return.
Who are the key regulatory authorities? How easy is it to deal with them and how long does it take to resolve standard issues?
Administration of Gibraltar’s tax assessment, collection and enforcement is undertaken by the Income Tax Office, through the figure of the Commissioner of Income Tax.
Are tax disputes capable of adjudication by a court, tribunal or body independent of the tax authority, and how long should a taxpayer expect such proceedings to take?
Appeals arising from the determinations of the Commissioner lie to the Income Tax Tribunal.
Are there set dates for payment of tax, provisionally or in arrears, and what happens with amounts of tax in dispute with the regulatory authority?
For employees, collection of tax is through a ‘Pay-As-You-Earn’ system, which requires the employer to deduct the corresponding tax from salaries and pay this directly to the Income Tax Office. Payment is due by the 15th day of the month following the liability.
Self-employed individuals are required to make two payments on account of tax on 31st January and 30th June of each year.
Companies are required to make payments on account of tax on 28th February and 30th September in each calendar year.
Anybody appealing against the amounts charged can apply to the Commissioner to have postponed all or part of the taxation shown as payable on the assessment (other than that part of the taxation which is not in dispute).
Is taxpayer data recognised as highly confidential and adequately safeguarded against disclosure to third parties, including other parts of the Government?
Yes, appropriate organisational and technical security measures are taken to protect personal data against accidental or unlawful destruction or loss, alteration, unauthorised disclosure or access.
Is it a signatory (or does it propose to become a signatory) to the Common Reporting Standard? And/or does it maintain (or intend to maintain) a public Register of beneficial ownership?
Gibraltar is an ‘early adopter’ of the CRS. It has committed to implement a public register of beneficial ownership.
Are there any plans for the implementation of the OECD BEPs recommendations and if so, which ones?
We are not aware of any current intentions.
Is there a GAAR and, if so, how is it applied?
Yes, the ITA contains anti-avoidance provisions. We are not aware they have been used to any wide extent since the implementation of the ITA.
Is the charge to business tax levied on, broadly, the revenue profits of a business as computed according to the principles of commercial accountancy?
Gibraltar operates a territorial system of taxation, taxing profits that accrue in or derive from Gibraltar-based profit-making activities.
Are different vehicles for carrying on business, such as companies, partnerships, trusts, etc, recognised as taxable entities?
Is liability to business taxation based upon a concepts of fiscal residence or registration?
Yes. Ordinary residence.
Are there any special taxation regimes, such as enterprise zones or favourable tax regimes for financial services or co-ordination centres, etc?
Are there any particular tax regimes applicable to intellectual property, such as patent box?
Is fiscal consolidation employed or a recognition of groups of corporates for tax purposes and are there any jurisdictional limitations on what can constitute a group for tax purposes? Is a group contribution system employed or how can losses be relieved across group companies otherwise?
Is there a CFC or Thin Cap regime?
Thin cap regime.
Is there a transfer pricing regime and is it possible to obtain an advance pricing agreement?
The ITA provides for the anti-avoidance provisions to be construed in accordance with the OECD standards. Whilst there has previously been a practice of providing advance tax rulings on the liability to corporate tax in Gibraltar, these rulings are no longer provided. In addition, 165 tax rulings provided by the Income Tax Office are currently the subject of formal investigation by the European Commission.
Are there any withholding taxes?
There are no withholding taxes in Gibraltar.
Are there any recognised environmental taxes payable by businesses?
Is dividend income received from resident and/or non-resident companies exempt from tax? If not how is it taxed?
There is no charge to tax on the receipt by a Gibraltar company of dividends from any other company, regardless of where incorporated. There is no tax on dividends paid by a Gibraltar company to another, and there is no liability to tax on dividends paid by a Gibraltar company to a person who is not resident in Gibraltar.