Friday, July 29, 2005

Opposition quiz Government on tax agreements with UK

Gibraltar Finance Centre debate

The GSLP/Liberals Opposition has expressed surprise that the Gibraltar Government should say that they are happy to enter into appropriate exchange of information arrangements with UK outside of the legal framework of the EU Directive for the Taxation of Savings Income.

In a statement issued yesterday, an Opposition spokesman said it was “incomprehensible” that the Gibraltar Government should have been “so angry and upset” at not being granted equal treatment by Britain in relation to other competitors, “when it now claims that this [exchange of information arrangements] will have no effect and that it is quite happy to do it.”

A GSLP/Lib spokesman said:

“There is of course no legal framework because there is no legal obligation to enter into such an agreement.

In the past Mr Caruana has indicated that it was not Government policy to enter into a voluntary agreement with the United Kingdom on exchange of information since this is not a requirement under European law.

In view of the fact that the Government announced in this year’s budget that Gibraltar residents are no longer required to pay tax on the income from savings and investments held outside Gibraltar, for example in the UK, there is even less reason for the Government of Gibraltar to want to receive this information from the UK in respect of its residents whose income is not taxable.

This in effect means that the granting of this exchange of information as a bilateral agreement based on reciprocity would be meaningless since the information would only be one way since it would only be useful to the UK Government to tax UK residents who have their money invested in Gibraltar.

Furthermore, when UK was negotiating with other Member States it agreed to the introduction of a system under which individuals in some Member States would be able to elect between paying a withholding tax or having their information provided to their home tax authorities.

Although the Gibraltar Government considered that giving competitors this advantage was denying Gibraltar institutions a level playing field, and although it said it pleaded with UK to be given equal treatment, the UK apparently turned a deaf ear to the pleas of the Gibraltar Government although it acceded to the same requests from the Channel Islands and the Isle of Man.

The Gibraltar Government complained bitterly about the attitude of the UK Government. It is incomprehensible that the Gibraltar Government should have been so angry and upset at the UK attitude when it now claims that this will have no effect
and that it is quite happy to do it.”

Related Articles & Links:

28 July 2005 - Government statement attempst to correct Taxation of Savings reports from Channel Islands

27 July 2005 - Guernsey decides not to shelve Tax deal with UK... yet!

European Savings Directive

22 July 2005 - Guernsey considers Euro Tax opt out

21 July 2005 - Gibraltar accused of taking advantage of loophole

04 July 2005 - Channel Island fury over Gibraltar tax ‘perk’

02 July 2005 - UK and Gibraltar Government seek deal on witholding tax


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