Gibraltar: Amendment to the income tax law
Reforms to the Income Tax Act 2010
A parliamentary statement on 24 January 2024 announced reforms to the income tax law (Income Tax Act 2010 (ITA 2010)):
- Paragraph 15, Schedule 3 ITA 2010 which defines any sum accrued as interest as a trading receipt for companies undertaking certain activities (currently money lending to the general public or deposit taking activities) would be expanded to include those undertaking insurance or distributed ledger technologies (DLT) activities.
- The statement refers to “regulated and registered entities” and ensuring that those being subject to this provision are those that receive interest as an “integral part of their trade.”
- The reform also identifies other classes of income that are similar or equivalent to interest income.
- This change is proposed to come into effect as of 1 February 2024, subject to the legislation being passed by parliament. The bill is currently being finalized and a press release will also be released providing guidance on the change.
- There will also be general and specific anti-avoidance provisions under which “arrangements and transactions entered into by in-scope taxpayers are not constituted in a manner that seek to circumvent tax on the resulting interest by reference to both main purpose of the arrangement or transaction or the disposal of any interest -bearing asset to connected persons.”
The Gibraltar Government on 1 February 2024 published the bill text [PDF 104 KB], which provides that the reform applies to a “person” and not just companies and to accounting periods commencing on or after 1 February 2024.
The legislation was passed into law by parliament on 26 March 2024. Read the Income Tax (Amendment) Act 2024
KPMG observation
Interest income (or amounts similar or equivalent to interest) received by insurance companies or DLT firms, which previously may not have been subject to tax in Gibraltar, would now be treated as trading income and included in the computation of profits of a company for tax purposes.
For more information, contact a KPMG tax professional in Gibraltar:
Darren Anton I darren.anton@kpmg.gi
Charles Hocking I charles.hocking@kpmg.co.uk