Helped by more than £4 million in tax revenues from the burgeoning internet gaming companies, and several "one-off" property development deals, Gibraltar's fiscal accounts remain healthy and the economy continues to forge ahead. This is apparent in the record of revenue and expenditure presented by the Government with this year's Budget.

Although clearly there are pressures on the Gibraltar's fiscal resources, a small surplus of slightly less than £3 million achieved in the 2004/05 financial year, has allowed the Government to introduce several tax concessions, some of which will appeal to both local and overseas investors.

New concessions on savings and on income from investments should help reduce the effects of some of the continuing uncertainty surrounding the final outcome of a legal ruling on the Rock's proposed new measures on corporate taxes.

(These, in part, hinge on the vexed question of "regional selectivity" on which the European Commission lacks consensus and whose resolution seems a long way ahead. Gibraltar is, in fact, a relatively small factor in the EU's 'regional selectivity' equation which also relates to Welsh and Scottish devolution in Britain and the status of the German lander.)

Nevertheless, and in spite of the uncertainties, indications are that investors continue to be attracted to what is internationally accepted to be a tax-friendly but well-regulated jurisdiction.

While the decision to abolish tax on all savings income is a move designed to encourage local residents to save for their old age and to stimulate personal investment, analysts believe that it could also encourage high-income expatriates in the financial sector to invest in the Gibraltar economy or at least "feed" their investments through local outlets.

In terms of the measure, "Savings income" is defined as dividends arising from investments quoted in a recognised stock exchange; interest paid directly or indirectly by banks, building societies or other financial services institutions licensed in Gibraltar or in any other recognised jurisdiction to undertake deposit-taking or investment business; or by the Gibraltar Government Savings Bank.

Taxation on dividends paid by one Gibraltar company to another local company and on dividends and interest paid by a company to non residents have also been abolished, as has the requirement to withhold tax from dividends paid by a Gibraltar company to non resident shareholders.

Among other measures is the abolition of stamp duty on all transactions except real estate and share capital transactions, though the duty on the latter (whether on initial creation or subsequent increase) will be a flat fee of £10. As for stamp duty on real estate transactions, properties costing less than £160,000 will be exempt from stamp duty. For properties worth between £160,000 and £200,000 it will remain at 1.26 per cent, while for properties worth more than £200,000 it will be increased to an amount, not yet decided, but which will not exceed 2.5 per cent.

Stressing the "strong" growth of the economy, which had made the tax concessions possible, the Chief Minister stated "By every known measure of economic growth our economy continues to grow by a handsome margin. In 2003 the economy grew 7.9 per cent to £507 million. The estimate for 2004 is that is has again grown by between 5 per cent to 7 per cent to around £530 million".

This "substantial economic growth" was achieved "notwithstanding a number of external factors which impact adversely on our economy". These included the current recession or downturn in many Western economies; the high price of oil; the adverse effect of the EU Savings Directive and the ever increasing impact on businesses of EU Environmental and health and safety regulations.

Many of the tax concessions and adjustments have been welcomed by local bankers and most financial players. It is generally felt that the new tax measures coupled with the fact that Gibraltar does not tax capital gains, will continue to strengthen Gibraltar's competitive advantage as an EU holding company jurisdiction.

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