July 12, 2023
Gibraltar issues Budget 2023/24
- Gibraltar's recently announced budget for fiscal year 2023/24 proposes to decrease taxes for most individuals while making few changes for corporations.
- This Tax Alert highlights the proposals.
On 11 July 2021, HM Government of Gibraltar announced its budget measures for the year 2023/24.
The measures include a slight decrease in tax rates for most individuals, together with a small number of tax initiatives for individuals. Very few changes were made to corporate taxation.
Key highlights of the announcement are summarized below.
- There are no changes to the tax bands under either the Allowance Based System or Gross Income Based System.
- Last year's budget introduced a 2% across-the-board increase in tax rates, to apply for two tax years. For 2023/24, this is partly reversed by a 1% reduction for all taxpayers with taxable income below £100,000 per annum. This will reduce the maximum effective (overall) tax rate for such taxpayers from 27% to 26%.
- Tax rates for taxpayers with taxable income of £100,000 or more will remain unchanged, with the maximum effective (overall) tax rate remaining at 27%.
- The Chief Minister reaffirmed his intention for the temporary increased rates to end in 2024/25, with the maximum effective rate for all taxpayers reverting to 25%.
- Private sector employers may provide tax-free assistance to their employees on the same terms as those announced in the budget for public sector employees (i.e., a one-off lump-sum payment). Such payments will not be a deductible expense for corporation tax purposes. The equivalent (tax-free) payments referred to for public sector employees are £1,200, £900 or £750, depending on the amount of basic salary.
- Taxpayers may offset their tax liability by claiming a deduction amounting to 10% of the cost of their gym membership, fees paid to a personal trainer registered with the tax authorities, and private school tuition fees paid in Gibraltar.
- A consultation process is to be set up in respect of new incentives, a distinct new regime for companies within the scope of Pillar Two and a domestic minimum top-up tax. It was announced that Gibraltar's implementation of Base Erosion and Profit Shifting (BEPS) Pillar Two is to take effect no earlier than for accounting periods beginning on or after 31 December 2024.
For additional information with respect to this Alert, please contact the following:
EY Limited Gibraltar
Published by NTD’s Tax Technical Knowledge Services group; Carolyn Wright, legal editor