Gibro Group Summary: Gibraltar Budget 2023
12 Jul 2023
On 11th July 2023, Gibraltar’s Chief Minister Fabian Picardo unveiled a 'financially prudent' budget expressing optimism about Gibraltar's recovery trajectory following fallouts caused by Brexit, Covid and the turbulence caused by the war in Ukraine.
He described Gibraltar as a ‘financial rock’ standing steadfast against economic adversity.
Here’s the Gibro Group’s technical summary of tax-related changes included in this year’s budget:
According to Gibraltar’s Chief Minister, this year's deficit is down to £15m, significantly improving from an initial forecast of £50m. A £2.5m surplus is projected for the 2023/24 fiscal year.
The GDP forecast shows promising growth - a 5.4% increase for 2021/22 and an anticipated rise of 7.5% for 2023/24.
Gibraltar’s Public debt/GDP ratio fell to 22.4% in 2022/23 from 25.6% in 2021/22, indicating a favourable economic trend.
Financial estimates for the 23/24 financial year are conservatively projected as £405.0m.
Taxation significantly contributes to Gibraltar’s economy and accounts for approximately 40% to 50% of recurring Government revenue.
The total amount of tax collected in the 22/23 financial year is £406.8m comprising of £247.7m in personal taxes and £159.1m in corporate tax.
£10m allocated in the financial year 23/24 to fund tax refunds.
Personal Tax Rates
Last year’s 2% personal income tax increase was halved to 1% for those on incomes below £100k. Those earning above £100k will continue with the same rates for another year.
All rates will return to the normal rate of 25% next year.
Public Sector lump sum
Public sector workers earning below £50k will receive a tax-free lump sum of £1,200.00. Public sector workers earning between £50-£75k will receive a tax-free lump sum of £900.00.
Public sector workers earning between £75k and £100k will receive a tax-free lump sum of £600.00. These sums will be paid at the end of the current quarter.
Private Sector incentive
For the private sector, Govt will permit 23/24 similar assistance by tax-free payments up to amounts and on the same terms. Must be excluded from payroll reporting and deduction not allowed against employer's corporate taxes.
Minimum Wage & Benefits
Minimum wage to increase by 50p - 6.2% to £8.60 an hour. Minimum wage 37.5 hour week = £16,770.00. Minimum wage 39 hour per week £17,440.00.
No date was given ref the application of minimum wage rises.
Those on the minimum wage, those on Disability Benefits and recipients of the State or Old Age Pension will benefit from increases in line with inflation (7%) to their payments.
Vacancy registration fees
The £18 charge for registering a vacancy with the ETB will be reduced to £8.60 and will increase in line with the minimum wage.
The £15 penalty introduced for vacancies not filled within a 10-day vacancy period will be waived at the discretion of the Director of Employment.
Tax credit to be introduced for Sole practitioners (lawyers) which allow a deduction of 75% of fees payable to LSRA from their tax liability.
10% of the verified costs for individuals enrolled in a gym or who contract a personal trainer registered with Gibraltar’s Income Tax Office.
10% of the cost of private school tuition in Gibraltar.
The stamp duty on sales over £800k will increase from 3.5% to 4.5%.
The Commissioner of Stamp Duties and the Financial Secretary to commence a consultation on whether we should introduce Stamp Duties in relation to the assignment of purchase contracts for real property (New developments and off-plan purchases).
The duty cap for the importation of petrol or diesel cars will be raised from £25,000 to £35,000.
A new £35,000 cap will be implemented to import pleasure vessels.
Duty rates for personal and commercial vehicle importations will be brought in line, but no commencement date for this and other duty-related changes has not been specified.
A rise in tobacco duty is planned, with an increase of £25 per master case, equivalent to an extra 50p per carton or 5p per box of 20 cigarettes.
Duty on vaping products and related items will be set at half the rate of a 20-cigarette pack.
Finally, in an effort to promote healthy lifestyles, the import duty will be eliminated on several health and fitness items, including fitness trackers, bicycles and related accessories, treadmills, and other gym or fitness equipment.
Summary of other measures
- No increases in water and electricity.
- Occupational pensions to increase by 2%.
- Students' maintenance grant to increase by 15%.
- Sponsored patient allowance to increase by 15%.
- No cost of living pay increase to public sector workers.
Gibraltar has pledged to enact the Organisation for Economic Co-operation and Development's (OECD) Pillar 2 rules. These regulations set a framework for multinational corporations to pay a minimum tax of 15% in each jurisdiction. The rules will apply to those multinationals with consolidated financial statement revenues exceeding 750 million Euros.
The enactment of the Pillar 2 rules in Gibraltar will not commence before accounting periods starting on or post-31st December 2024. The Chief Minister has expressed plans to establish a new unique system for companies under the purview of Pillar 2, including a domestic minimum top-up tax.
However, applying the Pillar 2 rules is conditional on a formal consultation process to be carried out. Further details of this process are to be released in due course.
Other News Articles
18 Sep 2023