Economy of Gibraltar


Economy of Gibraltar

The economy of Gibraltar is managed and controlled by the Government of Gibraltar. Whilst being part of the EU, Gibraltar has a separate legal jurisdiction from the United Kingdom and enjoys a different tax system. [ [http://www.gibraltar.gov.gi/gov_depts/taxation/tax_index.htm Gibraltar Taxation home page] ]

The role of the UK Ministry of Defence, which at one time was the main source of income, has declined, with today's economy based on shipping, tourism, finance centre activities, and the Internet.

In his June, 2005, budget speech, Chief Minister Caruana noted that Gibraltar's Finance Centre continues to grow and remains in healthy shape despite the challenges brought by both the EU's insistence that the territory change its offshore tax regime and the Savings Tax Directive.

Gibraltar will soon have a functioning stock exchange, the GibEX. [ [http://www.thegibraltarmagazine.com/stock_exchange.html Gibraltar Stock exchange] ]

hipping

Situated at the entrance of the Mediterranean, adjacent to one of the world's busiest shipping lanes and with more than 7,000 ship calls each year, Gibraltar is home to a wealth of shipping expertise and to many specialist companies offering a comprehensive range of support services. [ [http://www.gibraltarport.com The Port of Gibraltar website] ]

Finance

Gibraltar is a constituent part of the European Union, having joined with the United Kingdom in 1973, under the provisions of the Treaty of Rome relating to European dependent territories. However, it opted out of the Common External Tariff, the Common Agricultural Policy and the requirement to levy Value Added Tax. [ [http://www.gibraltar.gov.gi/latest_news/topical_speeches/status_in_eu.htm Gibraltar's EU status] ]

Financial institutions operating in Gibraltar are regulated by the Financial Services Commission. [ [http://www.fsc.gi/fsc/commission.htm Financial Services Regulator] ]

Subject to notifying the Commissioner, who must be satisfied that they meet certain criteria in accordance with the relevant EU Directive, Gibraltar licensed or authorised financial institutions can provide services throughout the EU and EEA without having to seek separate licences or authorisation in the 'host' Member State. This is known as the "passporting" of financial services. [ [http://www.fsc.gi/gib/eea.htm FSC Overview] ]

Referred as an International Finance Centre, [Gibraltar Financial Services Commission [http://www.fsc.gi/press/article20112004.htm Building a good reputation] ] Gibraltar was among 35 jurisdictions identified by the OECD as a Tax haven in June 2000.OECD, March 2002 [http://www.oecd.org/document/59/0,2340,en_2649_201185_2074555_1_1_1_1,00.html Gibraltar Commits to Co-operate with OECD to Address Harmful Tax Practices] . Retrieved on July 2006]

"That list should be seen in its historical context and as an evaluation by OECD member countries at a particular point in time of which countries met the criteria set out in the 1998 Report, Harmful Tax Competition: An Emerging Global Issue. More than five years have passed since the publication of the OECD list contained in the 2000 Report and positive changes have occurred in individual countries’ transparency and exchange of information laws and practices since that time. The list has not been updated to reflect such changes." [ [http://www.oecd.org/document/43/0,2340,en_2649_33745_36153067_1_1_1_1,00.html OECD issues a disclaimer on outdated report] ]

As a result of having made a commitment in accordance with the OECD's 2001 Progress Report on the OECD's Project on Harmful Tax Practices, Gibraltar is not included in the OECD's list of uncooperative tax havens. It has also never been listed on the FATF Blacklist of uncooperative countries in the fight against money laundering. It may also be referred to as an Offshore Financial Centre, by international institutions such as the IMF. [IMF, June 4, 2006 [http://www.imf.org/external/np/ofca/ofca.asp Offshore Financial Centers (OFCs): IMF Staff Assessments] . Retrieved on July 2006]

Fiscal advantages, including no tax on capital income, are offered to a maximum of 8,464 offshore qualified companies registered in Gibraltar.GibraltarOffshore.com [http://www.gibraltaroffshore.com/gibraltar-tax-exempt-company-changes.htm Gibraltar Exempt Company Registration Changes] . Retrieved on July 2006] After an agreement with the European Union in 2005, this tax-exempt regime is due to disappear on the 31st of December 2010.

A 2007 IMF report on the regulatory environment and anti-money laundering has once again endorsed Gibraltar’s robust regulatory environment. [ [http://www.gibnews.net/cgi-bin/gn_view.pl/?GOGX070522_3.xml Government announces IMF report] ]

According to the report -

:"Gibraltar has a well-regulated financial sector. The Gibraltar authorities are concerned with protecting the reputation and integrity of Gibraltar as a financial center, and are cognizant of the importance of adopting and applying international regulatory standards and best supervisory practices. Gibraltar has a good reputation internationally for cooperation and information sharing."http://www.gibraltar.gov.gi/gov_depts/finance/IMF_Reports/Assessment_of_Financial_Sector_Supervision_and_Regulation..pdf] [http://www.gibraltar.gov.gi/gov_depts/finance/IMF_Reports/Detailed_Assessment_Report_on_Anti-Money_Laundering_and_Combating_the_Financing_of_Terrorism.pdf] [http://www.gibraltar.gov.gi/gov_depts/finance/IMF_Reports/Detailed_Assessment_Report_of_Observance_of_the_Insurance_Core_Principles.pdf] [http://www.gibraltar.gov.gi/gov_depts/finance/IMF_Reports/Detailed_Assessment_Report_of_Observance_of_the_Basel_Core_Principles.pdf]

In 2008 Gibraltar was listed for the first time in the Global Financial Centres Index [GFCI] published by the City of London. [ [http://www.cityoflondon.gov.uk/Corporation/business_city/research_statistics/research_publications.htm Global Financial Centres Index] ]

The Rock was ranked 26th in a list of 69 leading finance centres around the world based on an online survey of 1236 business professionals, who provided a total of 18,878 assessments.

Gibraltar was also ranked in the top 20 centres for ‘e-readiness’, coming 20th after major capitals and leading offshore centres. [ [http://www.chronicle.gi/readarticle.php?id=000013083 Gibraltar Chronicle Story] ]

Tourism

Gibraltar has invested in a new terminal for cruise ships and is popular with this trade. There is also a coach park which caters for day tourists from Spain. There are two daily flights from the UK and since December 2006 daily flights to Madrid. In 2005 there were an estimated 6m tourists.

Internet business

Gibraltar offers a favourable tax system, good internet connectivity along with a well developed regulatory system. All gambling operations in Gibraltar require licensing under the Gambling Act 2005. The Gibraltar Regulatory Authority is the Gambling Commissioner under the Gambling Act 2005, and therefore the regulatory body. [ [http://www.gra.gi/Gambling/home.html The Gibraltar Regulator] ] Good regulation, and being within the EU is seen as a strong advantange by large legitimate operators. The UK has published Plans to protect online gamblers from crime and exploitation by banning gambling adverts from poorly regulated countries [ [http://www.gibnews.net/cgi-bin/gn_print.pl/?MISC070131_1.xml UK Gambling ad ban plans published] ] which specifically mention Gibraltar as an approved location.

Defence spending

Originally the mainstay of the Gibraltar economy, this has greatly reduced to around 6% of the GDP. In 2006 the MoD announced that it would contractorise the provision of services to the military base to make further cost savings.

Economy in detail

Gibraltar benefits from an extensive shipping trade, a well regulated international finance center, tourism, and has become a global leader in the virtual gaming industry. [ [http://www.fco.gov.uk/servlet/Front?pagename=OpenMarket/Xcelerate/ShowPage&c=Page&cid=1007029394365&a=KCountryProfile&aid=1018965242498 FCO company profile] ] [ [http://news.bbc.co.uk/2/hi/business/4776021.stm Gibraltar proves a winning bet] ]

The British military presence has been sharply reduced and now contributes about 6% to the local economy. The financial sector accounts for 20% of GDP; tourism (almost 5 million visitors in 1998), shipping services fees, and duties on consumer goods also generate revenue. In recent years, Gibraltar has seen major structural change from a public to a private sector economy, but changes in government spending still have an impact on the level of employment, currently running at some 2%. Average earnings have risen by more than 30% since 1996.

GDP:purchasing power parity - $500 million (1997 est.)

GDP - real growth rate:NA%

GDP - per capita:purchasing power parity - $17,500 (1997 est.)

GDP - composition by sector: "agriculture:"NA%industryNA%servicesNA%

Population below poverty line:NA%

Household income or consumption by percentage share: "lowest 10%:"NA% "highest 10%:"NA%

Inflation rate (consumer prices):1.5% (1998)

Labor force:14,800 (including non-Gibraltar laborers)

Labor force - by occupation:services 60%, industry 40%, agriculture NEGL%Unemployment rate2% (2001)Budget

revenues$307 million

expenditures$284 million, including capital expenditures of $NA (FY00/01)

Industries
tourism, banking and finance, ship repairing, tobacco

Industrial production growth rateNA%

Electricity - production100 GWh (2001)

Electricity - production by source

fossil fuel100%

hydro0%

nuclear0%

other0% (2001)

Electricity - consumption93 GWh (2001)

Electricity - exports0 kWh (1998)

Electricity - imports0 kWh (1998)

Oil - production 0 barrel/day (2001 est.)

Oil - consumption 42,000 barrel/day (6,700 m³/d) 2001

Oil - exports NA (2001)

Oil - imports NA (2001)

Agriculture - productsnone

Exports$81.1 million (f.o.b., 1997)

Exports - commodities(principally reexports) petroleum 51%, manufactured goods 41%, other 8%

Exports - partners
UK, Morocco, Portugal, Netherlands, Spain, US, Germany

Imports$492 million (c.i.f., 1997)

Imports - commoditiesFuels, manufactured goods, and foodstuffs

Imports - partners
UK, Spain, Japan, Netherlands

Currency1 Gibraltar pound = 100 pence

Exchange rates

Gibraltar uses the Gibraltar pound (GIP), pegged at a 1:1 exchange rate with the UK pound sterling. The pound sterling is also legal tender in Gibraltar.

Gibraltar pounds per US$1 - 0.0661 (2002), 0.6092 (January 2000), 0.6180 (1999), 0.6037 (1998), 0.6106 (1997), 0.6403 (1996), 0.6335 (1995);

Fiscal year
1 July - 30 June

Taxation

Gibraltar is a well known and regulated international finance centre and has been a popular jurisdiction for European off-shore companies.

Gibraltar's legal system is based on English law, but is separate from the English legal system. Tax exempt companies, which must not trade or conduct any business locally, are taxed at a flat rate of up to £300 a year. Gibraltar has not signed any Double Taxation Treaties. Non-resident businesses do not pay income tax unless the source of this income is Gibraltar proper. There is no tax on capital income.

In Gibraltar there is no capital gains tax, wealth tax, sales tax or VAT. Import duty is payable on most items at 12% The main tax for companies is income tax, and Social insurance contributions. there are also stamp duties on certain transactions, and property taxes ('rates').

Non-resident companies can take advantage of a number of offshore regimes in order to reduce taxation, although in line with the elimination of unfair tax practices this is being phased out. Individuals pay quite high taxes on their income in Gibraltar unless they are able to take advantage of High Net Worth Individual status or gain exemption as an expatriate executive. There is a moderately high estate duty, and import duties are quite high on some items.

Assessment and collection of tax is administered by the Commissioner of Income Tax; the tax year runs from first July to the following 30th June.

Tax rate information

Disclaimer: Tax rates may vary and information here may be incorrect or out of date. For the latest data see the Gibraltar Government website listed in external links.

Value Added Tax

There is no VAT in Gibraltar.

Gaming tax (Online gaming)

Levied at the rate of 1% of relevant income (gaming yield for on-line casinos and bets placed for on-line bookmakers), capped at £425,000 with a minimum payable of 20% of the cap figure.

Import duties

Levied on goods imported into Gibraltar, mostly at 12%.

Excise duties

Levied mainly on spirits, wines, tobacco and mineral oils.

ocial insurance, 2005

Employed persons contributions||

External links

* [http://www.gibraltar.gov.gi The Gibraltar Government website]
* [http://www.fsc.gi The Financial Services Commission]
* [http://www.gra.gi The Gibraltar regulatory authority]
* [http://www.gibraltar.gov.gi/gov_depts/govt_finance/Public_Finances_2005_2006.pdf Government revenue and expenditure 2006 - pdf]

References


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