Gibraltar

Budget 2023

On 11 July 2023, the Chief Minister delivered his budget speech, which included the below announcements.

Pillar Two

Gibraltar has committed to implement the Organisation for Economic Co-operation and Development (OECD) Pillar Two rules, which provides a framework for a minimum 15% tax to be paid by multinational groups in each jurisdiction in which they operate. The rules will apply to multinationals that have at least 750 million euros (EUR) of revenue in their consolidated financial statements.

The Pillar Two rules will take effect in Gibraltar no earlier than accounting periods beginning on or after 31 December 2024. The Chief Minister has indicated that a distinct new regime will be introduced for companies within the scope of Pillar Two, including a domestic minimum top-up tax. However, the implementation of Pillar Two will be subject to a formal consultation process (see below).

Consultation process

The Chief Minister announced the introduction of a consultation process in relation to tax with the aim of focusing on adaptive and progressive fiscal policy. Consultation will be facilitated with various industry bodies by the Gibraltar Finance Centre Council. Topics subject to consultation will include the following:

• Pillar Two global minimum tax.
• The introduction of a tax deduction in relation to the amortisation of acquired intangible assets (e.g. goodwill).
• The introduction of group relief.
• A review of the Income Tax Sub-Contractors Regulations 1994.
• A potential alignment of the tax filing requirements with those of the Company Registrar (including a review of the payment dates for corporate tax).

Stamp duty

From 11 July 2023, the allowance for first/second time buyers increased from 260,000 to 300,000 British pounds (GBP).

It is also proposed that the stamp duty rate applicable to property sales over GBP 800,000 will increase from 3.5% to 4.5% with the effective date to be confirmed at the time of publication.

The Commissioner of Stamp Duties and Financial Secretary will undertake a consultation on whether to introduce stamp duty in relation to the assignment of purchase contracts for real property.

Import duty

The following measures relating to import duty were announced:

• Existing measures reducing import duties to mitigate the effect of higher fuel prices will remain in place until 31 December 2023.
• Duty rates for private vehicle importations and importation of vehicles by dealers will be aligned. No details were provided as to when this or other import duty measures (below) will take effect. 
• The vehicle duty cap relating to the importation of petrol or diesel cars will be increased from GBP 25,000 to GBP 35,000.
• A new cap of GBP 35,000 will be introduced on the importation of pleasure vessels.
• Duty on tobacco will increase by GBP 25 per master case (50p per carton / 5p per box of 20 cigarettes). Duty on vapes and associated products will be set at 50% of the rate of a packet of 20 cigarettes. 
• Import duty will be reduced to zero in relation to the following health and fitness related items: fitness trackers, bicycles, bicycle accessories or spare parts, treadmills, and all other gym or fitness equipment.

Marketing allowance

In June 2022, the Chief Minister indicated that the additional deduction amounting to 50% of marketing costs announced in the 2021 Budget Address will be revoked with immediate effect. The incentive will now apply for one year only and is limited to marketing expenditure relating to marketing Gibraltar as a tourism destination or as a jurisdiction for the purposes of attracting new business ventures and enterprises to set up and operate from Gibraltar. The deduction will not be available for generic marketing of products or services to a company’s customer base.

Draft legislation has been published in relation to the above change; however, it has not yet been enacted.