Aug/Sept/Oct 2011 EDITORIAL COMMENT Volume 17/ Number 3 Budget Brings Mixed Message
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Gp6 BudIget NBews RAp10 Tax LTAuAg/Sept/ORct 2011 INTERNATIONAL FINANCE l INVESTMENT l BUSINESS BANKING Gibraltar: A Solid Rock in a hard place www.gibraltarinternational.com SPONSORS Gibraltar International Magazine is grateful for the support of the finance industry and allied services (with the encouragement of the Finance Council) in the form of committed sponsorship. We would like to thank the following sponsors: GIBRALTAR FINANCE CENTRE Tel: +(350) 200 50011 Fax: +(350) 200 51818 www.gibraltar.gov.gi DELOITTE ISOLAS / FIDUCIARY GROUP Tel: +(350) 200 41200 • Fax + (350) 200 41201 Tel: +(350) 200 78363 www.deloitte.gi Tel: +(350) 200 76651 www.gibraltarlawyers.com EUROPA TRUST COMPANY LIMITED www.fiduciarygroup.com Tel: +(350) 200 79013 • Fax + (350) 200 70101 www.europa.gi QUEST INSURANCE MANAGEMENT LTD. 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Presenting his 16th budget, the Chief WMinister reported still further economic growth, with near 100 per cent employment, personal and Contents business taxes at their lowest, rising pensions, and a budget surplus. NEWS P6 Being the last budget before a general election, you’d expect numerous references to improvements during his Economy growth brings lower tax government’s tenure and no-one can deny the jurisdiction’s transformation from pariah off-shore tax haven to and business support in Budget mainstream EU finance centre. Concern surrounds how everything has been achieved FUNDS P8 – ‘hocking the future’ as some describe increasing Gibraltar’s Recognition as an International borrowing to finance infrastructure and other improvements. Caruana stoutly denies the charge, pointing Centre for Investment Management – as with so many other facts and figures demonstrating The Rock’s progress – to a performance that is way better TAX P10 than the UK or almost any other EU economy. Whilst accountants KPMG applauded “another set of Gibraltar Budget 2011 impressive figures” and the often-critical Chamber of Commerce conceded it was “a good budget for business” FUNDS P12 overall, new Opposition Leader Fabian Picardo was (perhaps predictably) less enthusiastic. Gibraltar’s Fund Sector goes from strength to strength It’s not that he feels the economy is doing badly, more that Gibraltar could be doing so much better: the principal PROFILE P14 shopping area of Main Street was his only example though, Gibdock chief executive Joe Corvelli and he thought spending could be “better calibrated.” True, many still believe the £50m new airport terminal with up-to-date facilities and greatly increased capacity, is BANKING P18 over the top given the present (albeit slowly growing) airline Gibraltar: A Solid Rock in a hard place activity. Some, judging by appearances, even doubt Caruana’s notice that the building will be finished this FINANCE P24- 27 August and opened shortly after. Delay is the only area of dissent over the building of a Promotional push for business £123m power station at the south end of the Rock, to replace three old facilities in residential areas with poor Going Public - Is your Company Ready emission and other standards - it’s the jurisdiction’s largest for the Capital Markets? investment by far. For the first time in recent years, the expected growth BUSINESS ROUND UP P28 in GDP was, surprisingly to many, not quantified. And a negative feel was created by Caruana’s continued concern at the effect of not having available large-scale quality office space to satisfy the insurance companies, fund managers and gambling firms attracted by Gibraltar’s low business and personal taxes and stable economy. Without GIBRALTAR INTERNATIONAL MAGAZINE speculative space, he suggests, the finance centre Published by Gibraltar No part of this publication development will “grind to a halt”. International Publications Ltd . may be reproduced without That doesn’t sit comfortably with plans to intensify G7 Cornwall's Centre the written permission of the marketing and development of the Finance Centre. The PMB 104 publishers. PO Box 561 The publishers have tried to Minister has again threatened injection of public money – Gibraltar ensure that all information is indeed a government company has already been primed to accurate, but emphasise that do so – if a major building project doesn’t get under way Editor they cannot accept soon: the Opposition has vowed not to invest. [email protected] responsibility for any errors or omissions. The publishers And with full employment, any newcomers are Sales accept no responsibility for inevitably forced largely to import their teams, most living [email protected] statements made by across the border with Spain. No reference was made either contributors or for any claim to aspirations for a tax information exchange agreement, as Design made in an advertisement. a prelude to a double taxation agreement, with Spain under [email protected] the Tripartite Agreement that also includes the UK. UK Agent: © 2011 Gibraltar International There’s a clear impression that politicians are keeping Tel: 0044 (0) 1993 703560 Publications Ltd. their powder dry for an autumn election! Ray Spencer 4 GIBRALTAR INTERNATIONAL www.gibraltarinternational.com NEWS Economy growth brings lower tax and business support in Budget Gibraltar’s economy grew last year by “at doubt the Government’s firm estimates it will spend some determination to do so should £110m on projects, including least another 5 per cent” to exceed £1bn real projects not begin to £4m on new land reclamation, in sharp contrast to most of Europe, Chief physically materialize soon. and completion in August of the Gibraltar’s macro economic £50m air terminal opening in Minister Peter Caruana revealed in his July interests require it,” he September. Budget speech. But he made no forecast declared. In the meantime, opportu - nities need to be “seized and for 2011-12 beyond “continued expansion”, Difficult markets converted into real business. reports Ray Spencer Nevertheless, the private sector They will not happen by them - “achieved a creditable perform - selves”, he asserted. owever, he observed: being addressed. ance in difficult international “Some business sec - Social security contribu - and visitor markets”. Promotion plan tors in Gibraltar tions, up 10 per cent last year, Company tax yield last The Finance Centre - trans - Hhave done little bet - are unchanged, but Caruana year held up at £29m, with half formed from offshore tax ter than mark time during the warned that future annual a year at the previous 22 per haven to onshore European last year, reflecting the fact that increases would be in line with cent level and 6 months at the finance services centre - is now due to economic recession else - inflation. new low 10 per cent rate. “well placed to seize the where demand for Gibraltar’s Previously tax exempt opportunities offered by our goods and services have at best Office space companies start paying in status, reputation and new tax flat lined, and in some sectors dilemma August and the government is regime”. fallen a little, even though Crucially, growth in the finance gambling that this will make up Agreement with industry some parts of the Finance sector – accounting for around a near £19m shortfall when the players on “the broad outlines Centre have continued to a quarter of the economy – was lower level is applied to all busi - of our joint approach to grow”. being stymied by lack of “a ness for a complete tax year. marketing and developing Locally, mortgages and supply of quality office space on Private sector employment our Finance Centre” means business loans remain difficult a speculative basis”, Caruana rose by 546 jobs, including 165 Government resources and staff to obtain as a result of the inter - declared. in construction, 165 Finance skills being “significantly national credit crunch, Caruana Without available offices Centre positions and 98 in gam - upgraded”. noted, and as a result the con - “insurance companies, fund ing companies. In what is expected to be struction sector was being “sus - managers and gaming compa - “As a proportion of the size an election year, tax cuts tained” by government work. nies cannot come here, create of our economy [GDP], our costing £10m a year were jobs and help grow our expenditure is lower and our announced: the top rate falls Trading help economy”, he maintained and revenue is higher than is the from 29 to 28 per cent, while To assist wholesale and retail “those companies would go case in the UK”, Caruana the bottom rate lessens from 8 firms, a 20 per cent early rates elsewhere and our finance cen - reported.