On Monday 30 June 2014, 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 2011/12 financial year was calculated at £1.17bn, with 2012/13 estimated at £1.28bn.
• The Government’s latest estimates for GDP for the 2013/14 financial year are £1.41bn, which would represent a growth of 10 per cent for the year.
• 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 £47,066, which would rank third in the world, according to the International Monetary Fund per capital rankings.
• Gross Public Debt stands at 31 March 2014 was £450m and increase of £74m from the prior year figure of £376m.
• Net public debt stood at £354m, and increase of £62.7m from the previous year of £291.3m.
• The recurrent budget surplus for the 2013/14 financial year was £65m, compared to the original estimate of £17m.
Personal taxation
• An individual with assessable income of £10,500 or less will not be liable for income tax.
• An allowance of £3,000 is available for the installation of solar energy for boilers.
• Also under the Allowance Based System, from 1 July 2014:
o The Medical Insurance Allowance is increased from £2,000 to £4,000.
o The Nursery School Allowance is increased from £3,000 to £4,000 (per child).
o Blind Persons Allowance is increased from £3,000 to £4,000.
o Disabled Individuals Allowance is increased from £5,000 to £6,000.
o The Single Parent Family Allowance is increased from £3,000 to £4,000.
o The Personal Allowance is increased from £3,000 to £3,100.
o The Spouse Allowance is increased from £3,000 to £3,100.
• Under the Gross Income Based system, from 1 July 2014:
o A tax deduction of up to £6,000 is available in respect of approved expenditure incurred towards the purchase of a home
o The pension contribution allowance is increased to £1,200 from £1,000.
• The standard rate of tax for individuals is reduced from 30 per cent to 20 per cent.
• Approved employment related loans made to directors and connected persons to cease being treated as earnings from employment.
Social Insurance
• No changes to social insurance contribution rates.
Trusts
• The standard rate of tax for trusts is reduced from 30% to 10%.
Corporate taxation
• 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 continue to make Gibraltar a more attractive destination for shopping, import duty has been reduced with immediate effect as follows:
| LED lighting (including torches) |
0% (reduced from 12%) |
| Writing implements, including pens, pencils, ball point pens and felt-tip pens |
0% (reduced from 12%) |
| Mobile phones |
0% (reduced from 3%) |
| Pleasure craft, yachts and other vessels under 18m |
0% (reduced from 6%) |
| Pet food |
0% (reduced from 12%) |
| Fertilizers |
0% (reduced from 12%) |
| Paper based stationery |
0% (reduced from 12%) |
| Umbrellas, including sun umbrellas |
0% (reduced from 12%) |
| Sunglasses |
0% (reduced from 3%) |
| Musical instruments, parts and accessories |
0% (reduced from 12%) |
| Natural and cultured pearls |
4.5% (reduced from 12%) |
| Artwork |
0% (reduced from 12%) |
| Furniture, furnishings and domestic appliances imported by local companies |
3% (reduced from 6%) |
| Textiles imported with a trade licence |
3% (reduced from 6%) |
Other import duty changes:
• Import duty discount on hybrid vehicles is extended to purely electric vehicles, with cashback increased to £750 for vehicles and £150 for motorcycles.
• Import duty on rolling tobacco increased by 20 per cent to £42 per kilo.
Other areas
• Civil service pay to increase by 2.5 per cent with effect from 1 August 2014.
• With effect from 1st July 2014, the discount scheme for early payment of rates for offices, workshops and other businesses is increased from 10 per cent to 15 per cent.
• New companies starting up business in Gibraltar will be eligible for a discount for early payments of rates of 65 per cent in the first year of trading.
• No stamp duty is payable by first and second time homebuyers on the first £250k of the cost of the property.
• Passenger tax at the airport is abolished for passengers who are joining vessels in Gibraltar.
• The statutory minimum wage increases by 11 pence to £6.11 per hour with effect from 1 August 2014. (Note that this was subsequently amended to £6.15 per hour from 1 September 2014).
• Employee jobs of 22,907, up by 1,388 since October 2012.