GIBRALTAR Law and Practice Contributed by: Emma Lejeune, Stuart Dalmedo, Adrian Pilcher, Nicholas Isola, Danielle Victor, James Castle, Louise Anne Turnock and Danielle Curtis, ISOLAS LLP
5.7 Anti-Evasion Rules A person commits an offence if they are knowingly involved in the fraudulent evasion of income tax by them or any other person and could be imprisoned for up to seven years. 5.8 Tariffs No response provided.
Development Aid In order to encourage private development in Gibral - tar, promoters and developers of approved projects are offered certain incentives such as tax relief, import duty relief and rates relief. In order to qualify for the above reliefs, the project needs to be a new project Tax consolidation is not available in Gibraltar. 5.5 Thin Capitalisation Rules and Other Limitations Thin capitalisation rules are applicable in Gibraltar. For instance, interest paid on a loan by a company to related parties that are not companies, or loans secured by related parties where the ratio of the val - ue of the loan capital to the equity of the company exceeds 5:1, would be considered a dividend pay - ment and would not be a deductible expense for tax purposes. The interest limitation rule in Gibraltar provides that exceeding interest expenses are deductible up to the greater of (i) 30% of EBITDA, or (ii) EUR3 million. The overarching anti-avoidance provision in place in Gibraltar relates to the principle of “artificial and ficti - tious”, as referring to transactions that are seen as and meet certain criteria. 5.4 Tax Consolidation The general anti-avoidance rules should be interpret - ed in the manner that best secures consistency with the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations and other docu - ments designed as comprising part of the transfer pricing guidelines. If an amount charged for goods and services by a connected person is not at arm’s length, the expense allowed shall be subject to a minimum of (i) the amount of the expense; (ii) 5% of the gross turnover of the company; or (iii) 75% of the pre-expenses profit of the company. inauthentic and not real. 5.6 Transfer Pricing
6. Competition Law 6.1 Merger Control Notification
On 1 January 2021, the Competition Act 2020 (the “Act”) was introduced into Gibraltar law. The Act is the primary legislation governing merger control in Gibraltar. Under the Act, notification of arrangements or proposed arrangements which might have resulted or might result in the creation of a “relevant merger situation” may be done on a voluntary basis. A “relevant merger situation” is created for the pur - pose of the Act if two or more enterprises “cease to be distinct” and the value of the turnover in Gibraltar of the enterprise being taken over exceeds certain thresholds or meets the share of supply test. Enterprises will be deemed to “cease to be distinct” if they are brought under common ownership or control. Enterprises will be treated as being under common control if they are: • enterprises of interconnected bodies corporate; • enterprises carried on by two or more bodies cor - porate of which one and the same person or group of persons has control; or • an enterprise carried on by a body corporate and an enterprise carried on by a person or group of persons having control of that body corporate. The threshold for the value of the turnover in Gibraltar of the enterprise being taken over must exceed: (i) GBP1 million, if in the course of the enterprise ceas - ing to be distinct, a person or persons has brought a relevant enterprise under the ownership or control of the person or group; or (ii) GBP25 million in any other case.
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