Economy of Gibraltar
| Economy of Gibraltar | |
|---|---|
 Gibraltar five pound note |
|
| Currency | Pound Sterling |
| Fiscal year | 1 July - 31 June |
| Trade organisations | EU, OECD and WTO |
| Statistics | |
| GDP | £599 million (2006)[1] |
| GDP growth | 7% (2005 est.)[2] |
| GDP per capita | £20,831 (2006)[1] (25th) |
| Inflation (CPI) | 2.6 % (2006)[1] |
| Population below poverty line |
N/A[2] |
| Labour force | 12,690 (including non-Gibraltar laborers) (2001)[2] |
| Unemployment | 3% (2005 est.)[2] |
| Main industries | Financial services, tourism, shipping/manufacturing[1], tobacco[2] |
| External | |
| Exports | $271 million (2004 est.)[2] |
| Export goods | (principally reexports) petroleum 51%, manufactured goods 41%, other 8%[2] |
| Imports | $2.967 billion (2004 est.)[2] |
| Import goods | fuels, manufactured goods, foodstuffs[2] |
| Public finances | |
| Revenues | $455.1 million (2005 est.)[2] |
| Expenses | $423.6 million (2005 est.)[2] |
| [2].html Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars |
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The economy of Gibraltar is managed and controlled by the Government of Gibraltar. Whilst being part of the European Union, the British overseas territory of Gibraltar has a separate legal jurisdiction from the United Kingdom and enjoys a different tax system.[3]
The role of the UK Ministry of Defence, which at one time was Gibraltar's main source of income, has declined, with today's economy mainly based on shipping, tourism, financial services, and the Internet.
In his June 2009, budget speech, Chief Minister Peter Caruana noted that Gibraltar's economy remains in good shape and Government finances remain healthy, solid, stable and robust, despite global economic and financial turmoil.[4]
Gibraltar will soon have a functioning stock exchange, the GibEX.[5]
In December 2008 in a landmark decision the European Court of Justice ruled that:[6]
| “ | the Court finds that the competent Gibraltar authorities which have devised the tax reform have, from a constitutional point of view, a political and administrative status separate from that of the central government of the United Kingdom. | ” |
This allowed the implementation of a new low tax system which is to take full effect by 2010.
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[edit] Shipping
Situated at the entrance to the Mediterranean Sea, adjacent to the Strait of Gibraltar (one of the world's busiest shipping lanes) and with over 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,[7] most notably the dockyard of Gibdock.
[edit] Bunkering
Gibraltar is one of the largest bunkering ports in the Mediterranean Sea, with 4.3 million tonnes of bunkers delivered in 2007. This has become the main activity within the Port of Gibraltar.[8]
[edit] Finance
Gibraltar is a constituent part of the European Union as a Special Member State territory, having joined the European Economic Community with the United Kingdom in 1973, under the provisions of the Treaty of Rome relating to European dependent territories. However, it is exempt of the Common external tariff, the Common Agricultural Policy and the requirement to levy Value added tax.[9]
Financial institutions operating in Gibraltar are regulated by the Gibraltar Financial Services Commission.[10]
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 European Economic Area without having to seek separate licences or authorisation in the host Member State. This is known as the passporting of financial services.[11]
Referred to as an International Finance Centre,[12] Gibraltar was among 35 jurisdictions identified by the Organisation for Economic Co-operation and Development (OECD) as a tax haven in June 2000.[13] However, the list's disclaimer states:[14]
| “ | 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. | ” |
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.[13] 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 International Monetary Fund (IMF).[15]
However, in its April 2009 progress report, the OCDE listed Gibraltar in the list of jurisdictions which, although committed, had not "substantially implemented" yet the internationally agreed tax standard.[16] Following Gibraltar's signing of 12 additional Tax Information Exchange Agreements (TIEAs), as of October 2009, with jurisdictions including the UK, USA and Germany,[17] to sum 13, Gibraltar is currently listed in the OECD "white list", and is considered a jurisdiction that has substantially implemented the tax standard. It therefore shares the same status as OECD member states such as the UK, the USA, Spain or Germany.[18]
Fiscal advantages, including no tax on capital income, are offered to a maximum of 8,464 offshore qualified companies incorporated in Gibraltar.[19] After an agreement with the European Union in 2005, this tax exempt regime is due to disappear on the 31 December 2010.[19]
A 2007 IMF report on the regulatory environment and anti-money laundering has once again endorsed Gibraltar’s robust regulatory environment. [20]
According to the report:[21] [21][22][23][24]
| “ | 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. | ” |
In 2008 Gibraltar was listed for the first time in the Global Financial Centres Index published by the City of London Corporation. The Rock was ranked 26th in a list of 69 leading finance centres around the world based on an online survey of 1,236 business professionals, who provided a total of 18,878 assessments.[25]
Gibraltar was also ranked in the top 20 centres for e-readiness, coming 20th after major capitals and leading offshore centres.[26]
[edit] Tourism
Gibraltar has invested in a new cruise ship terminal and is increasingly popular with this trade. Its coach park is popular with day-trippers mainly from Spain. The Gibraltar Airport is serviced daily by flights from the UK and certain charter flights. In 2005 an estimated 6,000,000 tourists visited Gibraltar.[27]
Preliminary work was begun in 2004 on a 10-year project to construct a new hotel and marina project on the Eastside of the Rock, overlooking Spain's Costa del Sol. Designed by world-famous British architect Norman Foster, the 2 billion euro mega-project will feature three, 200-metre long finger quays and a sweeping kilometre-long curved breakwater to surround them, totaling over 300,000 square metres of infill. The project, known as Sovereign Bay, will include several hotels and casinos and is scheduled for completion in 2014.[28] The deep-draft breakwater will be capable of berthing large ocean liners within the "bay", while the marina will accommodate 500 private boats. Spanish news outlets expressed outrage over the Sovereign Bay project in January 2009, particularly over the fact that infill material to create the quays and breakwater was reportedly coming from Spanish quarries in Andalucia.[29]
[edit] 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.[30] Good regulation, and being part of 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[31] which specifically mention Gibraltar as an approved location.
[edit] Defence spending
The UK's Ministry of Defence was originally the mainstay of Gibraltar's economy but 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. This was finalised in January 2007.[32]
[edit] 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.[33][34]
Self-sufficient Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. The British military presence has been sharply reduced and now contributes about 7% to the local economy, compared with 60% in 1984. The financial sector, tourism (almost 5 million visitors in 1998), shipping services fees, and duties on consumer goods also generate revenue. The financial sector, the shipping sector, and tourism each contribute 25%-30% of GDP. Telecommunications accounts for another 10%. In recent years, Gibraltar has seen major structural change from a public to a private sector economy, but changes in government spending still have a major impact on the level of employment.
Figures from the CIA World Factbook show the main export markets in 2006 were United Kingdom 30.8%, Spain 22.7%, Germany 13.7%, Turkmenistan 10.4%, Switzerland 8.3%, Italy 6.7% while the corresponding figures for imports are Spain 23.4%, Russia 12.3%, Italy 12%, UK 9%, France 8.9%, Netherlands 6.8% and United States 4.7%.[35]
The Gibraltar Government state that economy grew in 2004/2005 by 7% to a GDP of £599,180,000. Based on statistics in the 2006 surveys, the Government statisticians estimate it has grown by 8.5% in 2005/6 and by 10.8% in 2006/7 and that the GDP is probably now around 730 million. Inflation was running at 2.6% in 2006 and predicted to be 2% to 3% in 2007. Speaking at the 2007 budget session, Peter Caruana, the Chief Minister said "The scale of Gibraltar's economic success makes it one of the most affluent communities in the entire world."
Labor force: 12,690 (including non-Gibraltar laborers) (2001)
Labor force - by occupation: services 60%, industry 40%, agriculture NEGL% Unemployment rate 2% (2001)
Budget revenues: $455.1 million expenditures: $423.6 million (2005 est.)
Public Debt 15.7% of GDP (2005 est.)
Industries tourism, banking and finance, ship repairing, tobacco
Industrial production growth rate NA%
Electricity - production 142 million kWh (2006 est.)
Electricity - production by source
fossil fuel 100%
hydro 0%
nuclear 0%
other 0%
Electricity - consumption 142 million kWh (2006 est.)
Electricity - exports 0 kWh (1998)
Electricity - imports 0 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 - products none
Exports $271 million (2004 est.)
Exports - commodities (principally reexports) petroleum 51%, manufactured goods 41%, other 8%
Exports - partners UK, Morocco, Portugal, Netherlands, Spain, US, Germany
Imports $2.967 billion (2004 est.)
Imports - commodities Fuels, manufactured goods, and foodstuffs
Imports - partners UK, Spain, Japan, Netherlands
Fiscal year 1 July - 30 June
The above figures taken from the CIA World Factbook September 2009 edition.[36]
[edit] Interaction with the nearby area
In September 2009 the Gibraltar Chamber of Commerce released an Economic impact study and analysis of the economies of Gibraltar and the Campo de Gibraltar produced by Professor John Fletcher of Bournemouth University.[37] The report aimed at clarifying the effects of Gibraltar's economy on the Campo area. It demonstrated that Gibraltar's economy has a significant and very positive economic impact on the Campo de Gibraltar. It also noted that the Campo region played a "significant role [..] in Gibraltar's economic development as well", concluding that "[b]oth economies and societies would be the poorer without the other..."[38]
Its conclusions were:[39]
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[edit] Taxation
Gibraltar benefits from an extensive shipping trade, offshore banking, and its position as an international conference center. It is a well known and regulated international finance centre and has been a popular jurisdiction for European offshore companies. The financial sector, tourism, shipping services fees, and duties on consumer goods generate revenue.[40]
The law of Gibraltar is based on English law, but is separate from the UK legal system.[41] 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 value added tax. Import duty is payable on most items at 12% The main tax for companies is Corporation 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 30 June.
[edit] Tax rate information
Information in this section taken from the publication "Gibraltar Tax facts" [42]
Disclaimer: Tax rates may vary and information here may be incorrect or out of date. For the latest data see the Government of Gibraltar website listed in external links.
[edit] Value added tax
Gibraltar is a VAT free jurisdiction.
[edit] Gaming tax (Online gaming)
Levied at the rate of 1% of relevant income (gaming yield for online casinos and bets placed for online bookmakers), capped at £425,000 with a minimum payable of £85,000.
[edit] Import duties
Levied on goods imported into Gibraltar, mostly at 12%. Computer equipment is at 6% and photographic equipment duty free.
[edit] Excise duties
Levied mainly on spirits, wines, tobacco and mineral oils.
[edit] Social insurance, 2009
| Class | Rate | Minimum | Maximum |
|---|---|---|---|
| Employee (under 60) | 10% earnings | £5.00 | £23.74 |
| Employer | 20% earnings | £15.00 | £29.97 |
| Self Employed | 20% earnings | £10.00 | £27.43 |
Minimums and maxima shown are per week. No contributions are payable if the person is not in receipt of earnings. Income earned by a student on holiday is exempt.
[edit] Corporation tax
Resident Companies Full Rate 22% Small companies Rate 20% Marginal relief 7.5% Small companies’ rate applies if taxable profits do not exceed £35,000 and the company derives at least 80% of its turnover from trading. Between £35,000 and £105,000 the full rate applies less marginal relief on the difference between £105,000 and taxable profits.
[edit] Withholding tax
| Class | Rate |
|---|---|
| dividends | 0% |
| In interest paid to resident individuals | 0% |
| On interest paid to resident companies | 22% |
| On interest paid to non-residents | 0% |
In addition, no tax is payable on dividends between Gibraltar companies
[edit] Companies enjoying special concessions
Tax rate/amount (irrespective of profits) Ordinarily resident Flat rate of £450 per annum. This will be phased out in 2010.
[edit] Capital taxation
- Estate Duty - There is no Estate duty in Gibraltar
- Capital Gains Tax - There is no Capital Gains Tax in Gibraltar.
- Other Capital Taxes - There are no wealth, gift or other capital taxes
[edit] Income tax rates
Gibraltar has two tax systems, one based on gross income which does not provide any allowances, and another with different rates which does. The choice of which system to apply is made by the taxable person.
GROSS INCOME BASED SYSTEM
1. Persons on gross income up to £16,000
| Income | Rate | Payable |
|---|---|---|
| 0 - £10,000 | 10% | £1000 |
| £10,001 - £16,000 | 20% | £1200 |
2. Persons on gross income £16,000 to £25,000
| Income | On first | Rate | Balance at 20% | Payable |
|---|---|---|---|---|
| £16,001 - £17,000 | £5000 | 0% | £11,000 - £12,000 | £2,200 - £2,400 |
| £17,001 - £18,000 | £4,000 | 0% | £1,301 - £1,400 | £2,600 - £2,800 |
| £18,001 - £19,000 | £3000 | 0% | £1,501 - £1,600 | £3,000 - £3,200 |
| £19,001 - £20,000 | £2000 | 0% | £1,701 - £1,800 | £3,400 - £3,600 |
| £20,001 - £25,000 | £1000 | 0% | £1901 - £2400 | £3,800 - £4,800 |
3. Persons on gross income over £25,000
| Income | Rate | Payable |
|---|---|---|
| £0 - £25,000 | 20% | £5,000 |
| £25,001 - £100,000 | 29% | £29,750 |
| Over £100,000 | 35% |
No allowances apply under this scheme which is the mainly the choice for non-residents.
ALLOWANCE BASED SCHEME
| Bands | Tax Rate | Tax on band |
|---|---|---|
| 0 - 4,000 | 17% (reduced rate) | £680 |
| 4,001 - 16,000 | 30% (standard rate) | £3,600 |
| Over - 16,000 | 40% |
A wide range of allowances apply for children, single parents, mortgage relief etc.
[edit] Stamp duty
Duty is on a scale as follows:
- Property worth up to £160,000 - stamp duty abolished.
- Property work more than £160,000 but not exceeding £250,000 - duty stays at 1.26%.
- Property value above £250,000 but does not exceed £350,000 – duty rises to 1.6%.
- Property value exceeds £350,000 - duty rises to 2.5%.
- Stamp Duty on mortgages above £200,000 rises to 0.20%.
[edit] Various economic indicators by national origin
Due to their business culture, the average annual earnings of Indo-Gibraltarians is nearly twice that of the rest of Gibraltarian people and approximately 1.5 times that of immigrants in the UK, thus making people of Indian descent by far the most economically affluent ethnic group in Gibraltar.[43]
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[edit] External links
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Wikimedia Commons has media related to: Economy of Gibraltar |
- The Gibraltar Government website
- The Financial Services Commission
- The Gibraltar regulatory authority
- Government revenue and expenditure 2006 - pdf
[edit] References
- ^ a b c d Foreign and Commonwealth Office - Gibraltar country profile
- ^ a b c d e f g h i j k l CIA - World The Factbook - Gibraltar
- ^ Gibraltar Taxation home page
- ^ Government of Gibraltar - Summary of 2009 Budget Points.
- ^ Gibraltar Stock exchange
- ^ European Court of Justice ruling on regional selectivity
- ^ Gibraltar Port Authority - Maritime services
- ^ Gibraltar Port Authority - Bunkering
- ^ Gibraltar's EU status
- ^ Gibraltar Financial Services Commission
- ^ Gibraltar Financial Services Commission - Overview
- ^ Gibraltar Financial Services Commission - Building a good reputation
- ^ a b OECD, March 2002 Gibraltar Commits to Co-operate with OECD to Address Harmful Tax Practices. Retrieved on July 2006
- ^ OECD issues a disclaimer on outdated report
- ^ IMF, June 4, 2006 Offshore Financial Centers (OFCs): IMF Staff Assessments. Retrieved July 2006
- ^ "A progress report on the jurisdictions surveyed by the OECD global forum in implementing the internationally agreed tax standard - Progress made as at 4th October 2009" (PDF). OECD. Organisation for Economic Co-operation and Development. 2009-04-04. http://www.oecd.org/dataoecd/38/14/42497950.pdf. Retrieved 2010-01-01.
- ^ "Gibraltar 'white-listed' by OECD". The Gibraltar Chronicle. 2009-10-22. Archived from the original on 2009-10-22. http://www.webcitation.org/5kiOrhzBk. Retrieved 2009-10-22.
- ^ "A progress report on the jurisdictions surveyed by the OECD global forum in implementing the internationally agreed tax standard - Progress made as at 20th October 2009" (PDF). OECD. Organisation for Economic Co-operation and Development. 2009-10-20. Archived from the original on 2009-10-22. http://www.webcitation.org/5kiOHMwjH. Retrieved 2009-10-22.
- ^ a b Gibraltar Tax Exempt Company Registration Changes. Retrieved on July 2006
- ^ Government of Gibraltar. "Publication of the IMF Evaluation on Gibraltar's Supervision of Banking, Insurance and Anti-Money Laundering Measures" (PDF). http://www.gibraltar.gov.gi/latest_news/press_releases/2007/118-2007.pdf. Retrieved 2008-10-17.
- ^ a b 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
- ^ Global Financial Centres Index
- ^ Gibraltar Chronicle Story
- ^ Gibraltar Official Tourist site
- ^ FosterAndPartners.com
- ^ Zibb.com[dead link]
- ^ The Gibraltar Regulator
- ^ UK Gambling ad ban plans published
- ^ MoD to make cost cuts
- ^ FCO company profile
- ^ Gibraltar proves a winning bet
- ^ CIA World Fact Book "Gibraltar". The World Factbook. https://www.cia.gov/library/publications/the-world-factbook/geos/gi.html#Econ CIA World Fact Book. Retrieved 2007-12-20.
- ^ CIA World Factbook
- ^ chamber releases report on economy
- ^ An Economic impact study and analysis of the economies of Gibraltar and the Campo de Gibraltar, by John Fletcher, September 2009. Introduction (page 2)
- ^ An Economic impact study and analysis of the economies of Gibraltar and the Campo de Gibraltar, by John Fletcher, September 2009. Executive Summary (page 6)
- ^ Gibraltar as a finance centre
- ^ Gibraltar Laws
- ^ Gibraltar Tax facts
- ^ Government of Gibraltar Website
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