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2016 budget details

12 July 2016

On Monday 5 July 2016, 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 2013/14 financial year was confirmed at £1.48bn, an increase of 12.3% on the prior year. The preliminary estimate of GDP for the 2014/15 year is £1.64bn, an increase of 10.7% on the prior year.
• The Government’s latest estimates for GDP for the 2015/16 financial year are £1.77bn, which would represent a growth of 8% for the year.
• The government is targeting a GDP to £2.4bn by end of March 2020 (based on a continued average growth of 7.5% per annum).
• GDP per capita for 2015/16 is estimated at £54,979, which would rank fourth in the world, according to the International Monetary Fund per capita rankings.
• Gross Public Debt stands at £447.7m 31 March 2016.
• Net public debt stood at £345m or 19% of GDP, a decrease of £30m from the previous year of £375m.
• The recurrent budget surplus for the 2015/16 financial year was £38.8m, compared to the original estimate of £18m.
• Recurrent revenue for 2016/2017 is budgeted at £590m, with recurrent expenditure budgeted at £570m, leading to a budgeted surplus of £20m.
• Inflation averaged 0.3% in 2015, compared to 1.8% in 2014.

Personal taxation
• An individual with assessable income of £11,050 or less will not be liable for income tax.
• Also under the Allowance Based System, from 1 July 2016:
o The Personal Allowance is increased from £3,200 to £3,215
o The Spouse Allowance is increased from £3,200 to £3,215
o The Medical Insurance Allowance is increased from £5,000
o The Nursery School Allowance is increased from £5,000 to £5,025
o The Child Allowance is increased from £1,100 to £1,105
o The Child Studying Abroad Allowance is increased from £1,250 to £1,255
o Blind Persons Allowance is increased from £5,000 to £5,020
o Disabled Individuals Allowance is increased from £9,000 to £9,040
o The Single Parent Family Allowance is increased from £5,264 to £5,290
o Dependent relative allowance from £300 to £305 (resident in Gibraltar) £200 to £205 (resident outside Gibraltar)

Social insurance
• No changes to social insurance contribution rates.

Corporate taxation
• No change to the corporate tax rate of 10 per cent.
• The rate paid by telecommunications companies on profits derived from non-telecommunications activities is reduced to 10% from 20%. Profits derived from telecommunications activities are still taxed at 20%.

Import duty

Item​ ​Import duty
Spectacles ​0% (reduced from 6%)
​Spectacle lenses (and contact lenses) ​0% (reduced from 12%)
​School satchels ​0% (reduced from 6%)
​Sanitary Towels and Tampons ​0% (reduced from 12%)
​Nappies and Nappy Liners for Babies ​0% (reduced from 12%)
​Pre-shave, Shaving and After-Shave preparations ​0% (reduced from 3%)
​Personal Deodorants and Antiperspirants ​0% (reduced from 3%)
​Perfumed Bath Salts and Other Bath Preparations ​0% (reduced from 3%)
​Electronic equipment and spare parts for use exclusively in
​0% (reduced from 12%)
​Sails ​0% (reduced from 3%)
​Propellers and related spare parts ​0% (reduced from 12%)

Other import duty changes:
• Import duty at 10% will be payable on fizzy and soft drinks (other than fruit juices or milk based drinks) with sugar content above 5g/100ml. The same level of import duty will be payable on sugar, sweeteners or derivatives used for sweetening of drinks produced in Gibraltar.
• Import duty on Water pipe Tobacco is increased from the current 12% ad-valorem duty to £3 per kilo.

Other areas
• Public Sector pay will rise by 2.75% with effect from 1st August 2016. An additional 0.25% will be payable to officers of the Royal Gibraltar Police, Customs, the Prison Service, the Gibraltar Fire Service, the Airport Fire Service, the Borders and Coastguard Agency, and the Ambulance Service.
• New companies starting up business in Gibraltar up to 30 June 2017 will be eligible for a £50,000 tax credit (shelter of £500,000 of profits) for each of the first three years of business, subject to certain conditions.
• The statutory minimum wage increases by 3 pence to £6.28 per hour with effect from 1 August 2016.
• The Income Tax Office has now finalised all tax assessments for the years 2009/2010 and 2010/2011 and plans to finish 2011/2012 and 2012/2013 this year.
• Utility bills (water and electricity) will remain unchanged.
• General business rates will remain unchanged.
• Old age pension increases in line with inflation: single rate increases from £438.78 to £440.54 and the couple rate increases from £658.22 to £660.85.
• Tax amnesty extended for a further six months, with the rate of tax payable on the declared income increasing to 7.5% from 5%.