Gibraltar: Budget 2022 measures affecting companies

Following the recent Gibraltar budget, a bill has been published that provides further information on the measures affecting companies. 

The bill provides that effective from 1 July 2023, penalties for the late filing of a company tax return will be based on the size of the company.

_{*Nine months after the end of the month in which the accounting period ends.} 

Audited accounts will now be required to be submitted with the company tax return when companies have assessable income in Gibraltar equal to or greater than £1.5 million (previously £1.25 million) for a 12-month period. For companies with assessable income below this amount, an independent accountant’s report is required. 

An additional marketing deduction was announced in the 2021 Gibraltar budget and was intended to be available for a period of two years. However, the bill confirms that this incentive now only applies to accounting periods ended in the period from 1 July 2021 up to and including 30 June 2022.

The bill also contains a definition of what constitutes an allowable cost for the purpose of the deduction and includes only “costs incurred in relation to the advertising or promotion of Gibraltar as a destination for the purposes of enhancing tourism, attracting visitors for leisure-related events, conventions, conferences or similar gatherings or a jurisdiction for the purposes of attracting new business ventures and enterprises to set up and operate in and from Gibraltar.” 

Companies that believe they have under-declared profits in the tax returns filed in relation to the 2020 and 2021 accounting periods and, as a result, have been assessed tax at a level lower, can—before 31 December 2022—elect to revise their positions and file amended tax returns accordingly. Any tax due as a result of such an amended tax return will be payable within 90 days after the date the assessment is made, and the company will not be liable to any further charge to tax.

Any company not filing an amended return but found to have under-declared profits and, as a result, assessed tax at a level lower, will be required to pay the tax assessed and also will be liable to a further charge that will be equal to the entirety of the amount assessed to tax. It is understood that the Income Tax Office will interpret this provision as the company having to pay the difference between what was previously paid and the newly assessed tax liability plus the entirety of the new tax liability for the period. This will be payable within 60 days after the date the assessment is made.

For more information, contact a KPMG tax professional in Gibraltar:

Darren Anton | darrenanton@kpmg.gi