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10.1. Specific Incentives

Gibraltar provides incentives for investment through low tax rates, EU financing programs, and other forms of tax relief. The following outlines the basic incentives:

Low Corporate Tax Rates

Gibraltar imposes a flat corporate income tax of 10% for all companies except energy and utility providers.

Limited Withholding Tax

Gibraltar does not impose withholding tax on dividend distributions or royalty payments. Withholding tax on interest payments can typically be reduced to 0%.

Tax relief on Capital Expenditure

Under the Development Aid program, qualifying developers are exempt from corporate income tax from a relevant development project until aggregate gains less losses exceed the approved portion of capital expenditure of the project.

In addition, interest received on approved loans used to finance a qualifying project is income tax exempt.

Enhanced tax deduction on Training Costs

Training costs borne by a company, is allowed as an expense against the profits of a business or company at the rate of 150%.

Green Incentives

The budget of 2015 provided a one-off tax deduction (with the percentage to be verified and subject to the discretion of the Commissioner of Income Tax) on the investment made by a company or business that makes a significant improvement to the Energy Performance Certificate (EPC) rating of their premises. Effective 1 July 2021, the deduction for improvements of EPC rating of premises/property is provided as follows:

  • Category A+- Tax deduction increased from 70% to 100%;
  • Category A- Tax deduction increased from 55% to 85%;
  • Category B- Tax deduction increased from 40% to 70%;
  • Category C- Tax deduction increased 25% to 50%;
  • Category D- Tax deduction increased from 15% to 30%;
  • Category E- Tax deduction increased from 15% to 25%; and
  • Category F- Tax deduction increased from 5% to 10%.

Incentives for Small Companies

Small business companies with less than 10 employees, receive a credit of social Insurance contributions, of up to GBP 100 per employee. For a newly setup companies, the credit will apply to if they have up to 20 employees in the first year of operation.

Other Incentives

Gibraltar announced the following tax incentives for companies:

  • For recruitment and training of new employees, employers are eligible for an allowance equivalent to 50% of fixed salary cost of every employee employed post 20 July 2021;
    • fixed salary costs refers to employment costs as per the contracted salary or similar with the Employment Service; and
    • measure is limited to the basic salary and is exclusive of bonuses, allowances, and overtime;
  • Allowance for qualified training under the Income Tax Act to be increased to 60% of the training costs;
  • An additional deduction of 50% of marketing costs is granted to companies provided they apply and prove that the expenses are validly incurred for business purposes; and
  • Increase in first-year allowance for plant and machinery and computer equipment (see Sec 6.3.).

The incentives apply from 20 July 2021 until 30 June 2023.