The Government of Gibraltar recently announced a series of tax measures as part of the 2012-2013 Budget. The main part of the change is the reduction of import duties as well as the withholding of personal income tax billed in a number of categories of taxpayers.
The government of Gibraltar has introduced a taxpayer-favorable budget, which focuses on consolidation efforts rather than limiting government spending.
Import duties will see the most extensive modification. They have been reduced or completely removed for various retail items. The majority of new electrical properties and computer software will be exempt from import duty. In addition, import duties on perfume, cosmetics, clothing, jewelry and mobile phone equipment will be cut by 50%.
With regard to import duties on hybrid cars and biofuels; this will be removed and instead, a cash back system will be implemented for those who buy environmentally friendly vehicles. It also said that import duties would be removed on imports of vehicles converted for use by people with disabilities.
Ships whose length is more than 18 meters are no longer subject to import duties. The reason is to encourage registration of super yachts in Gibraltar. On the other hand, import duties for vessels less than 18 meters in length will be subject to a shortened 6% rate. According to the previous administration, ships weighing more than 80 tons were invulnerable; however, those less than 80 tonnes have a 12% tariff attached to them.
Cigarettes will see a single increase in import duties. Import tax arrangements for cigarettes will be restructured. This will change from the rate applied per kilo to the rate per each pack of 20 cigarettes. As a result, this change will add 10p to a pack of cigarettes.
There have also been a number of major changes made to Gibraltar’s Gross Income-Based regime and the Benefits-Based System.
The government has pledged its desire to lower the maximum rate levied on personal income tax under the Allowance-Based System. They have stated that this will be reduced to 15% in 2015-2016. To initiate effective rate reduction, the rate relating to the first £4,000 of taxable income will be reduced from 17% to 15%. This will exempt taxpayers with income of £9,000 or less. Assistance will be further added in 2013 to exempt those on salaries of £10,000 or less.
Taxpayers who receive income between £9,000 and £19,500 will receive increased tax breaks to equalize the difference in tax liability between tax-paying and tax-exempt recipients. The new modification also targets to exempt all workers with disabilities from taxation.