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2013 budget details

01 July 2013

On Monday 24 June 2013, the Chief Minister set out the budget for the upcoming tax year commencing on 1 July. Details of the salient points derived from his budget speech are set out below:

The economy

• Gross Domestic Product for the 2010/11 financial year was calculated at £1,050m, an increase of 5.2 per cent on the 2009/10 GDP of £998m.


• The Government’s latest estimates for GDP for the 2011/12 financial year are £1,137m, forecast for GDP for 2012/13 at £1,226m, which represents a growth of around eight per cent per annum.


• With major capital expenditure expected over the coming years, the Government expects its initial estimate of GDP of £1.65bn for the 2015/2016 year to be exceeded.


• GDP per capita estimated at £41,138, which would rank fifth in the world, according to the International Monetary Fund per capital rankings.


• Gross Public Debt stands at £376m, a reduction of £142m from the previous financial year.


• Net public debt stood at £291.3m, which is a reduction of £12.1m from the previous figure of £303.4m.


• The recurrent budget surplus for the 2012/13 financial year was £37.2m, compared to the original estimate of £17m.

Personal taxation


• Income tax receipts for the year ended 31 March 2013 was £125m, a decrease of £7.2m from the previous financial year, mainly attributable to a decrease in employment in the construction industry.


• Also under the Allowance Based System, from 1 July 2013:

o The income tax rate on the bracket between £4,001 and £16,000 of income is reduced from 30 per cent to 24 per cent.
o Individuals earning up to £10,000 of income will not pay any income tax.
o The Medical Insurance Allowance is increased from £1,500 to £2,000.
o The Nursery School Allowance is increased from £2,000 to £3,000 (per child).
o Blind Persons Allowance is increased from £627 to £3,000.
o Disabled Individuals Allowance is increased from £2,724 to £5,000.
o The Single Parent Family Allowance is increased from £2,632 to £3,000.
o The Personal Allowance is increased from £2,812 to £3,000.
o The Spouse Allowance is increased from £2,632 to £3,000.

• Under the Gross Income Based system, from 1 July 2013:

o A tax deduction of up to £5,000 is available to first time buyers.
o An allowance of £1,000 is available in respect of employee contributions to approved pension schemes.

Social Insurance

• No changes to social insurance contribution rates.

 

Corporate taxation

• Corporate tax receipts for the year ended 31 March 2013 was £64.7m, an increase of £7.4m on the previous year.
• No change to corporate tax rate of 10 per cent.

Import duty

In order to further stimulate the retail sector in Main Street and to generally make Gibraltar a more attractive destination for shopping, import duty has been reduced with immediate effect as follows:

Item​ ​Import Duty
Jewellery ​4.5% (reduced from 6%)
Loose gemstones​ ​0%
Mobile phones​ ​3% (reduced from 6%)
Sunglasses​ ​​3% (reduced from 6%)
Sports equipment and spares and all articles for outdoor games​ ​0% (reduced from 12%)
​Bicycle spares ​​0% (reduced from 12%)
Artists', students' or signboard paints​ ​​0% (reduced from 12%)
Fishing rods, fish hooks and other online tackle​ ​​0% (reduced from 12%)
Binoculars and camera cases​ ​​0% (reduced from 12%)

 

Other import duty changes:

• Import duty on diesel fuel is increased with immediate effect by 6.5p per litre to 22p per litre.


• Import duty on marine fuel is reduced to zero per cent.


• Import duty on tobacco increased by 10p per packet.

Other areas

• Civil service pay to increase by 2.9 per cent with effect from 1 August 2013.


• With effect from 1st July 2013, the discount scheme for early payment of General Rates, which was introduced last year for all new companies starting up business in Gibraltar, will be extended to include a 25 per cent discount in the second year of trading.


• All new companies will therefore be given a discount in their General Rates bill of 50 per cent in their first year of trading and 25 per cent in the second year of trading.


• The zero per cent stamp duty threshold  of £250k will be extended to second time buyers.


• Maternity grant and death grants are both increased to £600.


• Audit exemption level under the Income Tax Act is raised to £1m for accounting periods ending on or after 1 July 2013.


• The statutory minimum wage increases by 30 pence to £6 per hour with effect from 1 September 2013.