GIBRALTAR Law and Practice Contributed by: Stuart Dalmedo, Adrian Pilcher and Louise Anne Turnock, ISOLAS LLP
Deductions and Adjustments A deduction is permitted for any expense wholly and exclusively incurred for the production of income. Non-deductible items include: • expenses not incurred for generating taxable income; • domestic or private expenses; • capital expenditure; • any sum recoverable under insurance or indemnity; • Gibraltar income tax; • depreciation (capital allowances apply instead); • contributions to non-approved pension schemes; • interest not incurred for the purposes of the trade or business; and • expenses disallowed under anti-avoidance provi - sions. Capital Allowances The following details the current regime – accounting periods ending after 30 June 2023. Capital allowances are available as follows. Plant and machinery • First year allowance – up to £30,000 of eligible purchases per accounting period. • Remaining balance – 15% per annum (reducing balance basis). Computer equipment • First year allowance – up to £50,000 of eligible purchases per accounting period. • Remaining balance – 15% per annum (reducing balance basis). Industrial buildings • 4% of the acquisition cost per annum. Pooling and disposal • All assets are pooled for capital allowance pur - poses. • Disposal proceeds reduce the pool. • Remaining pool value is carried forward. New businesses New businesses may claim 100% of eligible capital allowances in the first year of trade, subject to condi -
• Employer contributions are based on 18% of gross earnings, subject to a minimum of GBP31.98 per week or GBP138.55 per month and a maximum of GBP56.22 per week or GBP243.65 per month. • Self-employed contributions are 20% of gross earnings, subject to a minimum of GBP30.45 per week or GBP131.95 per month and a maximum of GBP53.55 per week or GBP232.05 per month. • Individuals aged 60 and over and those whose statutory occupational retirement age is earlier than 60 are exempt from paying the employee’s share of social insurance contributions. Gibraltar taxes companies only on profits accruing in or derived from Gibraltar. “Accrued in or derived from” refers to the location of the activities that give rise to the income. Certain categories of income are statuto - rily deemed to arise in Gibraltar, including: • income from an activity requiring a Gibraltar licence, or one passported into Gibraltar; • intercompany loan interest exceeding £100,000 per annum earned by a Gibraltar registered company; and • royalty income received by a Gibraltar registered company. Accounting Profits and Computation Rules Taxable profits are computed in accordance with the Income Tax Act 2010, using: • Gibraltar Generally Accepted Accounting Practice (GAAP); or • where applicable, UK GAAP or International Accounting Standards. After determining accounting profit, adjustments are made to comply with Gibraltar tax rules. Accruals Basis Profits are taxed on an accruals basis, not a receipts or cash basis. 2. Corporate Tax Regime 2.1 Taxable Profits Territorial Basis of Taxation
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