The taxable period is the accounting period of the company, which begins on the later of the beginning of the accounting period and the date when the company first receives a source of taxable income and ends on the earlier of the end of the accounting period, 12 months from the beginning of the accounting period, or the date on which trade ceased.
Companies with income subject to tax in Gibraltar are required to file a return and calculate their tax liability for the year. The return, together with the estimated liability, needs to be accompanied by payment of the tax due nine months after the date of the company's financial year end.
Companies with assessable income of more than GBP 1.5 million are required to file audited accounts together with the tax return.
Where companies have assessable income of less than GBP 1.5 million, the accounts can be accompanied by an Independent Accountant's Report.
Companies with no assessable income are still required to file tax returns. The accounts to be filed depend on the size of the company as determined by the CA 2014. Full audited accounts are required except where the company qualifies as 'small', which would mean satisfying two of the following criteria for two consecutive years:
- Net turnover of less than GBP 10.2 million.
- Total assets of less than GBP 5.1 million.
- Average employees of less than 50.
Where the company is 'small' and has no assessable income, only an abridged balance sheet needs to be filed.
Payment of tax
Companies are required to make payments on account of future liabilities on 28 February and 30 September in each calendar year. Each payment should be equal to 50% of the tax payable for the relevant accounting period. The relevant accounting period is a prior accounting period whose tax payable date (i.e. nine months after the date of the company’s financial year end) precedes the first payment on account date for the accounting period in question. The relevant table in Schedule 10 of the Income Tax Act can be used to determine the correct relevant accounting period for the purposes of calculating the payments on account.
The balance of tax due (i.e. the actual liability less payments on account) is payable on the date of filing of the return.
Penalties and fines
The following penalties and fines are applicable:
- For the late payment of tax, there is a penalty of 10% of the amount of tax due on the day immediately after such payment was due. A further amount penalty based on 20% of the tax due (including any unpaid surcharge) may be imposed if the tax remains unpaid after 90 days.
- Failure to file a return by the due date will result in a penalty of GBP 50 with a further penalty of GBP 300 / GBP 500 if the return is not submitted within three months / six months, respectively, after the due date.
The following increased late filing penalties based on the size of companies as defined in the Companies Act 2014 will apply as of 1 July 2023 (subject to the relevant legislation being enacted):
Company size After due date 3 months after due date 6 months after due date Micro / Small GBP 100 GBP 450 GBP 750 Medium GBP 750 GBP 1,250 GBP 2,000 Large GBP 1,500 GBP 3,500 GBP 5,000
- Failure to respond to a notice or request to submit information or documentation will result in a fine of GBP 200 on the day the failure occurs and a further penalty of GBP 1,000 if the failure to comply continues one month after the applicable day for delivery of the accounts as referred to in the notice. Failure to comply beyond a three-month period, if convicted, can result in imprisonment.
- For fraudulently, recklessly, or negligently delivering to the Commissioner an incorrect return, accounts, or information, there is a fine of up to 150% of the difference between the actual tax due and the tax due as per the original declaration. The amount of the penalty will depend on:
- the amount of the tax lost and/or delayed
- the gravity of the offence (i.e. if deliberate or an honest mistake), and
- the level of cooperation in the investigation.
- The Commissioner of Income Tax may publish details of a person who has failed to pay tax due under the Income Tax Act or under the PAYE regulations in the Gibraltar Gazette if:
- the Commissioner has notified the person of the Commissioner’s intention to do so 30 days prior to the publication
- the person has failed to pay tax due to an amount of GBP 5,000, and
- the tax due to be collected or paid has not been collected or paid for a period of at least three months after the due date.
- Failure to notify the Commissioner of an arrangement, the main benefit of which is to avoid the payment of tax, will result in a fine of GBP 200 on the day the failure occurs and a further penalty of GBP 1,000 if the failure to comply continues one month after the applicable day for providing the information.
The Income Tax Office charges administrative fees for the provision of information requests, including ordinarily resident certificates, subcontractor certificates, payment transaction print-outs, and copies of previous fillings and associated documentation.
Tax audit process
The Gibraltar tax system is based on self-assessment. However, the Income Tax Office has powers to make an enquiry into the tax return of a company within a period of 12 months from the date when the return is due to be filed or, if filed later than the deadline, 12 months from the date it was filed. If the Commissioner of Income Tax believes a return to be fraudulent, the above time limits will not apply.
A taxpayer may appeal against a disputed assessment by notice in writing addressed to the Commissioner within 28 days of the date of service of the notice of the assessment.
Statute of limitations
The Commissioner has up to six years following the date of assessment to revise any incorrect assessments. There is no limit where the incorrect assessment is as a result of fraud, wilful default, or neglect.
Topics of focus for tax authorities
There are currently no particular topics of focus for the tax authorities.