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The
assessment and collection of income tax is governed by the Income Tax
Act and by subsequent amendments by Rules and Regulations. The
Act was enacted in 1952 and came into effect on 1 April 1953.
Income tax
is charged on income accruing in, derived from or received in Gibraltar by
any person or company.
Dividends,
pensions and emoluments of office accruing in, derived from or received in
any place other than Gibraltar by an ordinarily resident person are also
taxable in Gibraltar. When taxed in the country of accrual and not
received in Gibraltar such income is exempt.
Income
arising outside Gibraltar, which although not actually received or
transferred, is obtained in Gibraltar by the taxpayer in the form of an
equivalent benefit, is treated as having been received in Gibraltar.
Income tax
is charged for the year of assessment - running from the 1 July in one
calendar year to 30 June in the next - on the basis of the income of the
preceding year except for income from employment or pension which is
charged on the basis of the income for that year. The taxpayer's aggregate
income, other than exempt income, is the "assessable income" and
the "taxable income" is the assessable income, as reduced where
appropriate in the case of an individual by the allowances described
hereafter.
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Deductions for personal
reliefs
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The
allowances and deductions are:
| Personal Allowance |
£2,660 |
Child Allowance |
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| Spouse Allowance |
£2,490 |
Only
first child educated in Gibraltar |
£940 |
| Dependant Relative Allowance |
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Each other educated abroad |
£1045 |
| Resident in Gibraltar (max. 2) |
£180 |
Disabled individuals Allowance |
£2,575 |
| Non-resident (max. 2) |
£130 |
Single Parent Allowance |
£2,490 |
| Home Purchase Allowance |
£11,500 |
Nursery School Allowance |
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| Deduction (£1,000 max p.a.) |
£4000 |
Attending private nursery during the pre-school year |
£965 |
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Medical Insurance (Max Relief) |
£1060 |
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Life assurance, etc.
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This
deduction is given in respect of amounts payable by the taxpayer or his
wife during the year of assessment for insurance premiums on his life or
that of his wife and for contributions to a pension scheme approved by
the Commissioner of Income Tax. The deduction is limited to one-sixth of
the assessable income and in the case of a policy securing a capital sum
on death to 7% of the capital sum excluding bonuses, etc.
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Health Insurance
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This deduction is
given in respect of amounts payable by the taxpayer, during the year of
assessment, towards an approved insurance policy, for premiums paid for
the purpose of providing health insurance for himself, his spouse or his
dependant children. This deduction is limited to £1060 in aggregate.
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Special deduction for senior
citizens
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Individuals of
state pensionable age ( i.e. men 65 years of age or over and women 60
years of age or over) are entitled to an additional personal allowance
being the difference between £10,300 and the standard personal allowance
and the wife allowance where applicable. The deduction is reduced
by one-twelfth for each complete calendar month during the year of
assessment that the individual is not resident in Gibraltar.
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Mortgage Interest relief
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A deduction
is given in respect of the amount of interest paid on
a mortgage or loan taken out by an individual for the
purchase or improvement of a house or flat in Gibraltar
for his own residential occupation.
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Pensions |
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A
pension from any statutory pension scheme or provident
or other fund approved by the Commissioner and received
by an individual who is -
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Aged 60 or over; or
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Compulsorily retired at age 55 by operation of section
8 (2) of the Pensions Act,
shall
form part of the assessable income of the individual but
shall be taxed at 0%.
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Charge to tax |
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Individuals
are charged to tax on their taxable income which is arrived
at by deducting personal and other allowances from the
assessable income at the following rates:
For
every pound of
the first £4,000 of taxable income - 17%
the next £9,000 of taxable income - 30%
the remainder of the taxable income - 42%
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Amount of tax payable by individuals who are ordinarily
resident in Gibraltar |
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Allowances
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Single
starts paying at £2,661 |
Married, no children
starts paying at £5,151 |
Married, 1 child
starts paying at £6,091 |
| Personal |
£2,660.00 |
£2,660.00 |
£2,660.00 |
| Spouse |
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£2,490.00 |
£2,490.00 |
| Child |
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£940.00 |
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| Income |
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| £3,000 |
£57.80 |
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| £4,000 |
£227.80 |
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| £5,000 |
£397.80 |
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| £6,000 |
£567.80 |
£144.50 |
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| £7,000 |
£782.00 |
£314.50 |
£154.70 |
| £8,000 |
£1082.00 |
£484.50 |
£324.70 |
| £9,000 |
£1382.00 |
£654.50 |
£494.70 |
| £10,000 |
£1682.00 |
£935.00 |
£664.70 |
| £12,000 |
£2282.00 |
£1535.00 |
£1253.00 |
| £14,000 |
£2882.00 |
£2135.00 |
£1853.00 |
| £16,000 |
£3522.80 |
£2735.00 |
£2453.00 |
| £18,000 |
£4362.80 |
£3335.00 |
£3053.00 |
| £20,000 |
£5202.80 |
£4157.00 |
£3762.20 |
| £22,000 |
£6042.80 |
£4997.00 |
£4602.20 |
| £24,000 |
£6882.80 |
£5837.00 |
£5442.20 |
| £26,000 |
£7722.80 |
£6677.00 |
£6282.20 |
| £28,000 |
£8562.80 |
£7517.00 |
£7122.20 |
| £30,000 |
£9402.80 |
£8357.00 |
£7962.20 |
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Low Income Earner’s Tax Credit |
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An individual
whose assessable income is no more than £8,000 in any
year of assessment is entitled to a Tax Credit of £275
(if the individual’s tax liability for any year of assessment
is less than £275 the Credit is reduced to that lesser
amount).
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| Special
allowance for individuals with total allowances amounting
to less than £3,500 |
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individual who, during a year of assessment, has total deductions
amounting to less than £3,500 shall be entitled to
claim a special allowance from the amount of his assessable
income equal to the difference between £3,500 and
the total of all other deductions |
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Residence |
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Ordinarily
resident when applied to an individual means an individual
who resides in Gibraltar
Non-resident
means any person other than a person ordinarily resident
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Permitted Individual |
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A
permitted individual is an individual who is a non-resident
individual who carries on, or undertakes in Gibraltar
any trade, business, profession, vocation or employment.
Permitted
individuals are entitled to the same personal allowances
and graduated rates of income tax as those afforded to
ordinarily resident persons in Gibraltar. However if a
permitted individual does not carry on, exercise or undertakes
any trade, business, profession, vocation or employment
in Gibraltar for a complete calendar month in any year
of assessment, the deductions, allowances and reliefs
allowed under the Act shall be reduced by one-twelfth
for every such complete month. One-twelfth shall reduce
the banding for each calendar month that the employment,
etc. is not exercised in Gibraltar.
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Qualifying Individuals |
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A
Qualifying Individual is an individual who is non-resident
and who derives no income from Gibraltar other than from
an exempt Company. The Finance Centre Director sets out
the rate of tax which is charged on the Qualifying Individual's
worldwide income. The rate of tax shall not be less than
2% and the total amount of tax charged shall not exceed
£20,000.
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Qualifying (Category 2) Individual |
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A
Qualifying (Category 2) Individual is an individual who
for the year of assessment:
(1)
has available to him for his exclusive use approved residential
accommodation in Gibraltar for the whole of the year of
assessment.
(2)
is not resident in Gibraltar and has not been in the previous
five years;
(3)
has applied to the Finance Centre Director and has been
issued with a certificate qualifying him as a Category
2 individual.
(4)
an individual who has been issued with a Category 2 Individual
certificate shall be liable to income tax on the first
£50,000 of assessable income only and the amount of tax
due and payable in any year of assessment shall be not
less than £14,000.
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Qualifying (Category 3) Individual |
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An
exempt company which satisfies certain requirements, may
apply to the Finance Centre Director and be issued with
a certificate designating an individual employed by that
company as a Qualifying Category 3 Individual. The individual
must possess skills essential to the operation of the
company, which are not available in Gibraltar. He must
not have been employed in or from Gibraltar in the five
years preceding the application and have approved residential
accommodation in Gibraltar.
Tax
of £10,000 per annum shall be payable in twelve equal
monthly instalments on the taxable income of the individual.
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Qualifying (Category 4) Individual |
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The
rules and conditions in respect of a Qualifying (Category
4) Individual are the same as for a Category 3 Individual.
However, in this case the company must satisfy the Finance
Centre Director that in connection with the appointment
of the Category 4 individual it has created a new and
additional employment which will endure for at least the
whole of the period during which a certificate has been
issued.
A Category
4 Individual whose taxable income does not exceed £50,000
per annum shall be charged £5,000 tax in that year of
assessment. When the income exceeds £50,000 per annum
the amount chargeable will be £10,000 in that year of
assessment.
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Corporation tax |
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The
rate of corporation tax is 35%
However,
small companies whose taxable profits do not exceed
£35,000 are charged at lower rate of 20%. If their
profits fall between £35,000 and £105,000 corporation
tax will be charged at 35% less relief of 3/40 on
the difference between £105,000, and the amount
of taxable profits.
The
definition of a "small company" is a company
whose trading activities has a minimum of 80% of
its trading receipts derived directly or indirectly
from sources other than;
(i)
dividends, interests or discounts;
(ii)
rents, royalties, premiums and any other profits
arising from property.
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Interest and dividends |
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The
following income is not chargeable to tax:
(i)
interest
paid directly or indirectly arising from investments
quoted on a recognised stock exchange, including
debenture stock, bonds, certificates of deposit
and any other instruments creating or acknowledging
indebtedness including bills of exchange accepted
by a banker and issued by or on behalf of
a government, a local or public authority;
or
(ii)
interest
paid by banks, building societies or other
financial institutions licensed in
Gibraltar or in any other jurisdiction to
undertake deposit taking or investment business;
or
(iii)
interest
paid by the Gibraltar Savings bank.
A company is required to deduct tax at source from
any mortgage or debenture interest, or interest
on any loan advanced to the company for a
capital purpose, paid to any person.
Such interest attracts a withholding tax of
30% if paid to an individual and 35% if paid
to a company and shall be available for set
off against any tax that may be charged on
that income.
Dividends paid by a company which is ordinarily resident
in Gibraltar are liable to tax in Gibraltar
when paid to a shareholder who is an
individual ordinarily resident in Gibraltar
or a permitted individual. A tax credit
at the rate of tax paid by the company on
the profits out of which the dividend is being
paid shall be available for set off against
any tax that may be charged on that income.
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| Gift
Aid |
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If
you pay tax in Gibraltar on your income, gains
or profits and then make a Gift Aid donation,
locally registered charities (including ecclesiastical
institutions and trusts) can claim back standard
rate tax relating to that donation directly
from the Income Tax Office.
Any
person (including a company or a body of persons)
is eligible to make a Gift Aid donation, if:
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It is made on or after 1st July 2006.
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It takes the form of a payment of a sum
of money.
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The aggregate sum gifted shall at present
not exceed £1,000 in any year of assessment.
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It is not subject to a condition as to repayment.
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Neither the donor nor any person connected
with the donor receives a benefit in consequence
of making the gift.
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At the time the gift is made, the donor
is in receipt of income chargeable to tax
in Gibraltar.
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The donor gives an appropriate declaration
to the charity.
In
order for the gift to qualify as a Gift Aid
donation, a declaration must be made to the
charity that:
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The donor wants the gift to be treated as
a Gift Aid donation; and
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The donor has paid sufficient tax in Gibraltar
for the year of assessment the donation
is made to cover the standard rate tax the
charity will reclaim from the Income Tax
Office.
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Exempt Company |
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An
exempt company is a company in respect of which the Finance Centre Director has issued a
certificate under the Companies (Taxation and Concessions)
Act exempting the company, inter alia, from corporation
tax on the profits of the company.
The Exempt Company regime is being phased out
- no new Exempt Company certificates are being issued
as from 30th June 2006.
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Double taxation arrangements |
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A Gibraltar resident who is in receipt of income which is liable
to tax in Gibraltar that is derived from and has already
suffered tax in any other jurisdiction, shall be entitled
to double taxation relief in Gibraltar in respect of that
income of an amount equal to the tax already deducted
or the Gibraltar tax, whichever is the less.
For
further information please contact Commissioner of Income
Tax: incometax |
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