GIBRALTAR Law and Practice Contributed by: Stuart Dalmedo, Adrian Pilcher and Louise Anne Turnock, ISOLAS LLP
9.2 Government Policy and Objectives Approach Gibraltar has consistently aligned itself with the OECD BEPS agenda, and the government’s stated policy is to adopt further BEPS measures as they are co- ordinated internationally, particularly those aimed at preventing double non-taxation, improving tax trans - parency, and maintaining Gibraltar’s position as a compliant, reputable international finance centre. On 31 December 2024, legislation was passed imple - menting the Pillar Two global minimum tax rules in Gibraltar. The legislation confirms a 15% domestic minimum top-up tax (DMTT), which applies to multina - tional enterprise (MNE) groups and domestic groups meeting the revenue threshold for financial years starting on or after 31 December 2023. The legisla - tion has also introduced an income inclusion rule (IIR), which applies for financial years starting on or after 31 December 2024. 9.3 International Tax Although Gibraltar is a small country, tax has a high public profile in the jurisdiction. This is a result of cer - tain sectors of Gibraltar’s economy having a global reach, such as the gaming sector and the growing fintech and distributed ledger technology framework. This is likely to influence the implementation of BEPS recommendations as Gibraltar looks to remain fully compliant with international tax obligations to ensure equivalent standards with the UK and the EU. 9.4 Competitive Tax Policy Objectives The policy of successive Gibraltar governments has been to provide a competitive tax environment that is fully compliant with international best practice. Gibral - tar has always been an early complier with OECD and other international initiatives, and that policy is expected to continue. 9.5 The Competitive Tax System Gibraltar has a competitive tax system in place that includes the following: • a partial territorial tax system – companies are only taxed on activities located in Gibraltar; • a low corporate tax rate of 15%; • no VAT or sales tax;
A further notable feature of Gibraltar’s updated regime is the regulatory referral power. The Commissioner may refer advisers, such as lawyers, accountants or corporate service providers, to their professional or regulatory bodies where they have assisted in fil - ing incomplete returns, or where the Commissioner reasonably believes they have promoted, facilitated or advised on an arrangement that contravenes the spirit and purpose of the Act, or acted with a conflict of interest. Together, these provisions create a modern, robust anti-avoidance framework that businesses, share - holders and advisers must take into account in any Gibraltar tax planning or structuring exercise. Gibraltar does not have a regular routine audit cycle. It is possible for the Income Tax Office to raise queries, but this normally occurs on an informal basis. 9. BEPS 9.1 Adoption of BEPS Recommendations Gibraltar joined the OECD Inclusive Framework on BEPS in 2019 and has since implemented several of the key BEPS recommendations. These include the introduction of country-by-country reporting (CbCR) requirements for multinational groups and the adop - tion of Mandatory Disclosure Rules (MDR) modelled on the EU DAC6 framework, requiring intermediaries and taxpayers to report certain cross-border arrange - ments. Gibraltar has also enacted measures aligned with OECD transfer pricing principles, allowing the Commissioner to adjust transactions that are not consistent with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. These measures form part of Gibraltar’s broader com - mitment to international tax transparency and the BEPS agenda. 8. Audit Cycles 8.1 Regular Routine Audit Cycle
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