BUDGET MEASURES 2016
- Government residential rents will increase this year for the first time in 32 years by 3% which will amount to an average of 60p per week. There will be anual increases thereafter.
- Import Duty on Spectacles is reduced from 6% to 0%
- Import Duty on Spectacle lenses is reduced from 12% to 0%
- Import Duty on Contact Lenses is reduced from 12% to 0%
- Import Duty at 10% will be payable on fizzy and other soft drinks (other than fruit juices or milk-based drinks) with a sugar content of above 5 grams per 100 millilitres.
- The same level of import duty will be levied on sugar, sweeteners or other derivatives used for the sweetening of drinks produced in Gibraltar.
- Import Duty on School Satchels is reduced from 6% to 0%
- Import Duty on Sanitary Towels and Tampons is reduced from 12% to 0%
- Nappies and Nappy Liners for Babies is reduced from 12% to 0%
- Pre-shave, Shaving and After-Shave preparations is reduced from 3% to 0%
- Personal Deodorants and Antiperspirants is reduced from 3% to 0%
- Perfumed Bath Salts and Other Bath Preparations is reduced from 3% to 0%
- Duty on electronic equipment and spare parts for use exclusively in boats, including fish finders, marine radios, radar and GPS plotters is reduced from 12% to 0%
- Duty on Sails is reduced from 3% to 0%
- Duty on propellers and related spare parts is reduced from 12% to 0%
- Import duty on Waterpipe Tobacco will rise from the current 12% ad-valorem duty to £3 per kilo.
UTILITIES AND BUSINESS RATES
- Electricity and water charges will not be increased this year.
NEW START-UP INCENTIVE SCHEME
- In order to encourage any business giving setting up in Gibraltar due consideration the Government will implement a startup incentive. Any company that sets up in Gibraltar over the next 12 months and meets the following conditions will be eligible for this incentive.
The conditions are:
- It must be a new business setting up in the period from the date of this speech to 30 June 2017;
- The business must employ at least 5 employees in the first year;
- The business must not represent a transfer of a business previously existing in Gibraltar or one that is used as a transfer pricing mechanism to allocate profits from a business previously existing in Gibraltar;
- Anti avoidance provisions will be applied to ensure this represent a new business setting up in Gibraltar;
- The incentive will be available for companies or limited partnerships but not for individuals trading in their own name.
The incentive is:
- Over the first three financial years of trading of the start up business the Company will be eligible for a tax credit equal to the tax due up to a maximum of £50,000 over each of the first three years;
- The tax credit does not carry forward from one year to the next, therefore if the company does not make a profit and is unable to make use of it, it is lost. It is not eligible for repayment by the tax office;
- The incentive simply acts as a mechanism to shelter a liability to tax up to a maximum of tax equivalent to £50,000 per annum, thereby effectively sheltering £500,000 of profits per annum.
INCREASE IN SOCIAL INSURANCE CONTRIBUTION
For now, given the seismic effect that the BREXIT decision has had on financial markets and on business, after very careful consideration and after detailed consultation with Unite the Union, the Federation of Small Businesses and the Chamber of Commerce, the Government will not increase social insurance contributions. It will observe the effects of the decision on business in Gibraltar and will if necessary make the necessary increases at the beginning of the calendar year 2017.
- With effect from 1st July 2016, taxpayers with assessable income of £11,050 or less will be brought out of the taxation system altogether and will pay no income tax. This applies to taxpayers in both the Allowance Based System and the Gross Income Based System.
- With effect from 1st July 2016 the following allowances will increase as follows:
- The Personal Allowance is increased from 3,200 to £3,215
- The Spouse and Civil Partners Allowance is increased from £3,200 to £3,215
- The One Parent Family Allowance is increased from £5,264 to £5,290
- The Nursery Allowance is increased from £5,000 to £5,025
- The Child Allowance is increased from £1,100 to £1,105
- The Child Studying Abroad Allowance is increased from £1,250 to £1,255
- The Dependant Relatives Allowance is increased a. where the relative is resident in Gibraltar from £300 to £305 b. where the relative is resident outside Gibraltar from £200 to £205.
- The Disabled Individual Allowance is increased from £9,000 to £9040
- The Blind Allowance is increased from £5,000 to £5020
- The Medical Insurance Allowance is increased from £5,000 to £5,020
COMPANY TAX FOR TELECOMS COMPANIES
- Telecommunication companies are currently liable to pay company tax at the higher rate of 20% on all their taxable income. This applies not only to the taxable income on the business generated from the provision of telecommunication services, but also to the taxable income on the business generated from non-telecommunication services, such as Data Centres.
- In order to ensure a ‘level playing field’, company tax at the higher rate tax of 20% shall apply only to the profits and gains arising from the telecommunication activities which are specifically mentioned in the Income Tax Act and the lower 10% rate of tax shall apply to the gains and profits arising from their non-telecommunication business activities.
- The Government has decided to extend the Tax Amnesty for a further period of 6 months effective from midnight yesterday but the rates which will be applied to will not be as advantageous.
- The Tax Amnesty will apply upon the payment to the Commissioner of Income Tax of:
- 7.5% of the total amount remitted to Gibraltar and deposited here; or
- 7.5% of the value of any assets purchased abroad from the proceeds of the income accrued and derived in Gibraltar on which tax should have been paid.
THE OLD AGE PENSION & MINIMUM INCOME GUARANTEE
- Old Age Pensions will increase this year in line with the rate of inflation so that the single rate for Old Age Pension would increase from £438.78 to £440.54 and the couple rate would increase from £658.22 to £660.85.
- At the same the cash differential will be maintained with the Minimum Income Guarantee.
INCREASE IN PUBLIC SECTOR PAY
- The general level of Public Sector pay will rise by 2.75% with effect from 1st August 2016. An additional 0.25% will be payable to officers of the Royal Gibraltar Police, Customs, the Prison Service, the Gibraltar Fire Service, the Airport Fire Service, the Borders and Coastguard Agency, and the Ambulance Service.
INCREASE IN NATIONAL MINIMUM WAGE
- The statutory minimum wage will increase from £6.25 to £6.28 per hour with effect from 1st August 61 2016. This represents an increase of around 0.5%, which is above the rate of inflation.
PENSIONS IN THE PRIVATE SECTOR
- Given the BREXIT decision, the government will not be progressing this process in this financial year whilst it observes the effects on the economy of the result of the vote of the British people.