Gibraltar companies can be regarded as international (business) companies in view of the fact that companies are not restricted to domestic trade and local ownership only. Instead, a company established locally can engage both international and domestic trade. In spite of this, a clear distinction is made between resident and non-resident companies due to the fact that Gibraltar fiscal regime is based on territoriality.
To be distinguished as a non-resident company, a Gibraltar company cannot be owned by persons who are ordinary residents of Gibraltar, must designate a resident secretary in Gibraltar, must maintain a registered office and the necessary registers for logging all relevant details pertaining to the company, its members and owners. Non-resident Gibraltar companies must not engage in any local commercial activity by providing its products and services to local residents and must not remit income for withdrawal anywhere in Gibraltar. Non-resident Gibraltar companies are free from exchange controls and fully capable of transferring funds into and out of the country.
Similar non-resident provisions apply to trusts whose settlors and beneficiaries do not reside in Gibraltar. Such trusts can be easily referred to as non-resident/offshore or international trusts based on Gibraltar tax structure. Trust assets are not liable to any taxes including stamp duty except if such trust property is not located in Gibraltar, and Gibraltar levies no estate duty, capital gains, or gift tax on non-resident trusts. Asset transfers are not subject to any duties or taxes.
Protected Cell Companies (PCC) are exempt from taxes if non-resident but and are subject to a license fee which must be paid every year. An additional fee is applicable for every cell that a PCC possesses.
As an offshore tax shelter, Gibraltar also does not impose withholding tax on dividends if profits are offshore profits, on interest payments if a loan given originates from a foreign jurisdiction. In further support of its low/zero tax fiscal regime, tax exemptions also benefit local residents who are not subject to any VAT, or capital taxes such as estate duty, gift tax or tax on capital gains.
In an attempt to broaden its offshore financial services through collective investment schemes as a tax haven, Gibraltar enacted the Financial Services (Collective Investment Scheme or CIS) Ordinance under which the UCITS (Undertakings for Collective Investments in Transferable Securities) Management Directive and Product Directive (identified as UCITS I and II respectively) were implemented. This legislative framework ensures that collective schemes operating with Gibraltar as a tax haven are recognised, authorized, private and operated by experienced investor funds. Under the CIS Ordinance, restrictions were placed on certain activities such as acting as the trustee of a unit trust, the manager of, or closure of, any given collective investment scheme or as the sole director or depository of an open-ended investment company, for which the necessary authorization are required. Tax haven Gibraltar UCITS are endowed with the ability to enter the EU and the EEA (European Economic Area) single market in investment services, to which Gibraltar entities were granted passport since 2003.
In facing up to the increased demands of the Organisation for Economic Development and Cooperation, tax haven Gibraltar came to its final resolutions regarding the phasing out of the Gibraltar tax exempt company. It is expected that this process will be complete by 2010, during which time the Gibraltarian government intends to introduce a flat, low corporate rate across the board. In his June 2007 budget speech Chief Minister Peter Caruana also expressed the importance of the Gibraltar Tax Exempt Company, which he described as the backbone of the development and growth of both the finance centre, the online gaming sector, not excluding job creation. The new proposed tax rate for tax haven Gibraltar is expected to range anywhere from 10% to 12% and will reflect similar moves that have been already made in Malta, Cyprus, Ireland and other EU member countries. Although plans of revising Gibraltar’s tax structure were on stream as early as 2003, increased demands by the OECD added urgency to Gibraltar’s quickened steps. In November 2008, Caruana expressed his Gibraltar’s commitment to enact the relevant legislation by July1, 2009.
|
Copyright © TaxHaven.org |