HM Government of Gibraltar's budget measures announced on 20 July 2021 included an increase in the corporate tax rate from 10% to 12.5%, noting Gibraltar's continuing largely territorial taxation basis, as a result of which only income accrued and or derived from within Gibraltar or deemed to do so (as in the case of royalty income or net intercompany interest income where the threshold of £100,000 per annum is met or exceeded) being subject to such levy.
The anticipation was that this new rate would apply to financial periods commencing after 20 July 2021, but the Gibraltar Commissioner of Income Tax has yesterday clarified that:
“The increase in the corporate tax rate to 12.5% is effective as from 1st August 2021, meaning that where a financial year straddles the 31st July 2021, the 12.5% rate will be applied to those months in that financial year from August 2021 onwards.”
So, for example, for a company with taxable profits in a financial year that straddles the 31st July and the remainder of the year, corporation tax will be levied at the rate of 10% for those months up to and including 31 July 2021, with the balance months of the financial period being subject to the rate of 12.5%.
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1098. Mr Speaker, nonetheless what is clear is that under Pillar 2 the world will likely soon be moving to a minimum tax rate of 15%. 1099. Mr Speaker, for this reason I am today announcing an increase in corporation tax in Gibraltar.