The Budget 2024 – The Hon Minister Feetham’s Address

03 Jul 24

Madam Speaker,

I stand before you today delivering my first budget speech in this Parliament.

I will provide an overview of the activities and initiatives I have been delivering since the 12th of October 2023, when I was appointed Minister for Justice, Trade and Industry, a portfolio that includes Financial Services, Gaming, Justice, Postal Services and Taxation.

Given my wide ministerial portfolio and the focus by the Leader of the Opposition on the corporate tax measure announced by the Chief Minister yesterday, I propose to deal with all my Ministries as briefly as possible. This will allow me to respond to points raised by the Honourable Leader of the Opposition and to also present the new tax measures we were proposing to announce today.

The last 8 months has been a period of review, change and development across all sectors under my responsibility.

Broadly, work continues to diversify the financial sectors both geographically and in terms of product offering. It is a priority of our Government to try to dilute the concentration risk where appropriate.

I set out below some of the initiatives implemented in connection with the Financial Services Industry.


Gibraltar Finance

Madam Speaker, I start with Financial Services.

It has been a year of significant change for the team at Gibraltar Finance. Last year, we said goodbye to James Tipping, Finance Centre Director and to two of our Senior Executives, namely Michael Ashton and Tim Haynes.

A recruitment process followed for the posts of Finance Centre Director and one Senior Executive. No candidate was successful for the Finance Centre Director position, so the Government has decided to leave the position vacant for the foreseeable future.

These changes have had the effect of significantly reducing the cost base of the Department by over £400,000 per annum.

Madam Speaker, since taking office, the total revenue received by the FinanceCentre under “Other Charges” in the financial year 2023/2024 has been over £7.44m. Between financial year 2011/2012 and financial year 2023/2024, the total revenue received under the same subhead was just over £10m, of which 74% was collected in financial year 2023/2024.

I have also had a look at the spending of the Department. We have implemented spend control measures and decided, for example, to make changes to the budget by removing 30% of the cost to allow us to focus on the areas that deliver most value to the industry as a whole.

Over the years, the Government has provided considerable support to the Gibraltar Financial Services Commission (FSC), including the subvention and contributions to cover extraordinary expenses. This year the FSC was holding significant reserves, which allowed the Government to reduce the subsidy to £150,000, from £805,000. This allowed the Government to deploy resources elsewhere, where it was most needed, including a higher budget allocation for training for the Royal Gibraltar Police.

Madam Speaker, Gibraltar continues to be a premier destination for financial services. Our regulatory frameworks are designed to protect investors while fostering innovation. One of our important manifesto commitments is to grow the sector and we want to do that in a safe and secure manner that protects the consumer and guards the macroeconomic future of Gibraltar. We also want to enhance competitiveness and foster employment opportunities, particularly for our youth.

The Connect Hub

The Connect Hub is a strategic initiative designed to empower our youth and bridge the skills gap and increase employment in Gibraltar's financial sectors. We have tried to assist young job seekers, offering support and guidance to those exploring career opportunities.

The Connect Hub collaborates with leading companies in the financial sectors to provide mentorship, internships and job placements. It also works in partnership with the Digital Skills Academy hosting workshops and outreach programs to raise awareness and interest in the financial sectors. These seek to raise awareness, especially among our young people, of the career opportunities in banking, insurance, online gaming and other related industries. I would like to thank Heather Victory, Nicolas Rocca, Karon Cano and the rest of the team for the excellent work they are doing.

Outreach Programme

My Ministry is committed to fostering strong relationships with our local firms through an Outreach Programme. I have been delighted to accept invitations from so many firms to visit their premises and meet their people at all levels. SinceOctober 2023, we have proactively engaged with over 20 companies across Gibraltar, reflecting our dedication to understanding and addressing the needs of our financial sectors.

The Outreach Programme has included visits to a diverse range of businesses, encompassing key pillars of our economy such as banks, accountancy and insurance firms, online gaming companies, investment firms, DLT organizations and more. It has been an absolute pleasure not just to meet with the senior management teams but also, and more importantly, to meet with the workforce. I have met many wonderful people and this has allowed me to gain insight into the unique challenges and opportunities that these businesses face.

The Outreach Programme is about taking a proactive Ministerial approach, listening to and collaborating with our stakeholders.

We are also reviewing and engaging with important industry groups across the sectors both at home and abroad. Included in this outreach are bodies such as the British Blockchain Association, the All PartyParliamentary Groups forCryptoassets andBlockchain,Association ofBritish Insurers (ABI), Motor Insurance Bureau (MIB) to name but a few.

Captive Regime

Madam Speaker, in the wake of Brexit, Gibraltar finds itself presented with a unique opportunity to forge ahead with the establishment of a captive regime tailored for international business, an endeavor previously hindered within the confines of the EU. The Government is actively engaged in consulting the sector on a captive regime, specifically catering for international entities beyond the UK and EU passported jurisdictions.

To drive this initiative forward, a dedicated working group has been formed, comprising industry experts, government officials and key stakeholders. The Group is working on the development and implementation of the captive regime, ensuring that it meets the needs of international businesses while aligning with global best practices.

One of the primary objectives of the Working Group is to design a regulatory framework that is both attractive and secure for captive insurance entities. The aim is to address the specific requirements of international captives, facilitating their establishment and operation in Gibraltar. In addition, Madam Speaker, this initiative should help the insurance sector diversify from the concentration risk within the Gibraltar Authorisation Regime (GAR), especially with the latest indication being that Gibraltar companies write 37% of the UK motor market. This will not only enhance the jurisdiction's attractiveness to global businesses but also stimulate economic growth, create job opportunities, and foster innovation within the local insurance market.

Travel Scheme for the Elderly

The Travel Scheme for EligibleElderlyResidentCitizenswas successfully launched on the 8thMarch 2024, providing a vital solution for elderly citizens who face challenges in securing travel insurance. As of now, the scheme has recorded 2,827 registrations, with a majority of these registrations occurring through a face-to-face process organized by the Ministry at the John Mackintosh Hall, which drew 1,811 attendees.

This initiative has proven especially beneficial for those hesitant to travel to Andalucia, Spain due to previous medical conditions, age, or cost-related concerns that made it difficult for them to obtain private medical travel insurance. Madam Speaker, we said we would deliver a solution and we did within 4 months of being elected.

We have also stopped abuse of the Scheme by wealthy members of our community and I may say more about this in the future, Madam Speaker.

In the open insurance market, the indicative cost for an over 60s scheme was estimated to be at least £1,500,000 and could have exceeded £10,000,000, annual premium, depending on the number of elderly citizens. This would still have come with terms and limits, especially regarding pre-existing medical conditions, which would have excluded many elderly citizens from coverage. Instead, we have implemented a captive-type solution as I initially explained in Parliament, at a significantly reduced cost (in fact, a very small fraction). This prudent and innovative approach to fulfilling our manifesto commitment has allowed us to reallocate the saved funds to other areas of Government expenditure.

I would like to express my gratitude to Mr Karon Cano, Senior Project Manager for the excellent work he has done in assisting me with the implementation of the Travel Scheme.

Financial Services

Madam Speaker, there are a number of other projects at different stages of development. Specific announcements on these initiatives will be made in due course.

The Government has a macro-economic policy interest in encouraging economic growth, whether in financial services or other sectors of the economy. An important aspect of such growth is speed to market, which is often influenced by the legislative and regulatory landscape. Similarly, Madam Speaker, the Government has a macro-economic obligation to ensure that public funds are used prudently. While businesses will sometimes fail as a result of their commercial activity, the Government’s policy is to minimize the risk of such business failures placing an undue burden on public funds quite apart from the disruption to local consumers. I am delighted, Madam Speaker, that on the 28th May 2024, the Financial Services (Amendment) Act 2024 passed in Parliament With unanimous support of this House, with the Opposition expressing their full support for the macroeconomic importance of the legislation. I am grateful to the Opposition for this.

Separately, I have recently consulted theHon.MemberOppositeMrClinton on a piece of insurance related insolvency legislation I propose to bring to this House, intended to safeguard the financial stability of Gibraltar in a particular area and I am grateful that he has shown an appreciation for the importance, where necessary, of working together in the best interest of Gibraltar.

Madam Speaker, may I express my sincere gratitude to the team at the FSC led very ably by CEO Kerry Blightfor their diligent work and support during my time in office. I would particularly like to highlight the contribution made by the young team Julian Sacarello, Jamie Triay Clarence, Julian Warwick and Daniella Benamor, only because I have worked more closely with them than other colleagues.

As a jurisdiction, we continue the detailed and substantial work required for delivery of the GAR, that delivers UK market access for our financial services firms. This requires us to review all our financial services legislation, working closely together with colleagues from the UK Government. This is an ongoing programme of drafting and consultation and I am grateful to the Policy team at the FSC for their work in this area. My thanks also to the industry for supporting this work. I know that many people continue to give of their time working often to tight timescales.

My Ministry, together with various departments and agencies, also worked very hard to address the deficiencies identified by the Financial Action Task Force (FATF) and successfully removed Gibraltar from the FATF list of countries under increased monitoring, the so-called “Grey list”. Madam Speaker, I will come back to this issue later on in my speech when I cover the work done under my Justice portfolio.

Madam Speaker, before I turn to Online Gaming, I would like to thank the Finance Centre Council and the various Working Groups for their time and commitment. I am very obliged.

I would also like to thank Mr Jonathan Bracken for the legal drafting work he does for the Government, spanning several years. His knowledge of our financial services legislation is quite frankly extraordinary and I am very grateful to him for his excellent work.

Finally, I would like to thank Paul Astengo and Emma Azzopardi, Senior Executives and the rest of the team at Gibraltar Finance for their support.


Madam Speaker, I now turn to Online Gaming.

The Gambling Division continues to deliver significant value for money.

The Division, which has 10 staff, including theGamblingCommissioner, operates on a budget of less than £1 million.

In addition to gambling duty, license fees and change of control fees, since 2020, the Gambling Division has brought in an additional £6.2 million of revenue in regulatory settlements and last year revenue exceeded estimates by over £2 million.

Madam Speaker, the sector generally provides a significant proportion of Government tax yield principally through PAYE, Social Insurance and Corporate Income tax. As a Ministerial policy initiative, the Gambling Commissioner and Income Tax Commissioner have signed an MOU to ensure a joined up approach to optimizing tax compliance earlier this year and yield in conjunction with licensing activity.

Gibraltar has a total of 50 licensees.

We have seen some market consolidation through M&A activity, acquisition and rationalization, but Gibraltar remains an important gambling hub for what are now multi-jurisdictional businesses. The main market for our operators is the UK (72% by using gross gambling yield as a proxy), but we continue to see interest in Gibraltar as a base for rest of the world business. We are still managing interest from operators for licensing in the jurisdiction.

Sector employee numbers are 3,711

There are strong relations with the UK Gambling Commission.

In addition, and alongside a policy group advising the Government on the new Gambling Bill, the Gambling Division has supported me from a technical and sector knowledge perspective; as well as maintaining the important relationship with the Gibraltar Betting and Gaming Association and the wider industry.

Madam Speaker, we desire to grow the number of operators in Gibraltar but that cannot be at the cost of Gibraltar’s reputation. As the responsible Minister and Licensing Authority, I am focussed on both the integrity of operators and the value they bring to our economy; both in terms of tax yield and wider macro-economic contribution.

I also want to thank the sector for its constructive engagement with me. We are aware that the sector has had to handle recruitment and other operational challenges, but that the sector also appreciates the advantages of being located in Gibraltar.

I would like to thank Mr Andrew Lyman, Gambling Commissioner and his team of regulators and administrative staff for the fantastic work they do in overseeing and administering this vital sector of the economy.

I would also like to thank Sir Peter Caruana KC, Peter Montegriffo KC, Peter Isola and Albert Isola for the very valuable advice they have provided me and the Gambling Commissioner on the new Gambling Bill, which I propose to bring to Parliament at the earliest possible date.


Madam Speaker, I now turn to Justice.

Government Law Offices and Office of Criminal Prosecutions and Litigation

I start with the Government Law Offices and the Office of Criminal Prosecutions and Litigation.

Madam Speaker, the Government’s team of lawyers have continued to play a crucial part in delivering legal advice to the Government, shaping legislation, and providing legal representation to our governmental departments and law enforcement agencies.

Madam Speaker, the team at the OCPL continue to diligently and professionally represent the Crown in our criminal courts at all levels. The successes that they have achieved in the past year have not gone unnoticed and it is clear that they represent the Crown independently and capably at all times. Aside from their work in the courts the OCPL continue to work on a number of projects in the ongoing and continuing Moneyval process.

I would like to thank Christian Rocca KC, Director of Public Prosecutions, Paul Peralta, Parliamentary Counsel and their respective teams for all their hard work and advice.

Gibraltar Law Courts

This year has been a challenging one for the Courts on account of the retirement of two members of the judiciary. The Stipendiary Magistrate Mr Charles Pitto retired in September 2023 and you Madam Speaker retired from the Supreme Court in November 2023. The Judicial Service Commission immediately embarked on the recruitment process for both these two positions and acting on advice from the Commission, His Excellency the Governor appointed Mr Charles Bonfante as Stipendiary Magistrate & HM Coroner who took up office on 18 March 2024 and Professor Matthew Happold as Puisne Judge of the SupremeCourt. Professor Happold will take up his post on 1 August this year.

As a result of several retirements and in order to maintain the Complement of existing Justices of the Peace, a recruitment process is currently being undertaken by the Judicial ServiceCommission.

As Minister for Justice, I will continue to work closely with Hazel Cumbo,theChief Executive of the GibraltarCourts Service to ensure thattheCourts' back office administration is properly resourced to ensure that the level of performance, support to the Judiciary, Court users and the legal profession is maintained so as to continue delivering a timely and efficient justice system that is open to all. My thanks to Hazel and her team.

His Majesty’s Prison

Madam Speaker, in respect of His Majesty’s Prison, I am delighted to report that there has been no major incident or disturbance reported.

The average population figures for the last financial year stood at 31 prisoners. I am happy to say no Juvenile admissions were recorded during this period.

In respect of rehabilitation the prison continues to be well served by professionals offering a variety of programs to assist offenders in breaking the offending cycle and becoming productive members of the community. Inmates receive counseling and psychiatric evaluation to assist in their journey to rehabilitation. Organizations like Narcotics Anonymous also provide a valuable service. The prison facilities continue to be well used by those in custody.

Madam Speaker, the Government has invested in the training of Prison Officers who have attended a variety of courses ranging from, Control and Restraint instructor’s course held in Cyprus, Mental Health First Aid, Suicide prevention, First Aid at work and FirstResponse EmergencyCare amongst others.

I would like to thank the Prison Superintendent Nigel Gaetto and his team for doing a great job. I also want to thank all the members of the Prison Board for their time and the tremendous work they do.

Youth Offender Centre

Madam Speaker, this Government is committed to finding an answer to the question of how best Gibraltar, as a whole, could tackle the issue of juvenile offenders in our community.Madam Speaker will, both from her time on the bench and now as Speaker of this Parliament, note that this is not a new or novel issue.

There has been talk over the past few years in particular as to whether a solution to this would be a purpose-built youth detention center for Gibraltar. In fact the need to make a decision on this issue, after proper consultation with relevant experts, was a manifesto commitment for this administration and one which I was keen to make progress on as soon as was practicable.

The information which I received from the experts all pointed to one conclusion. Given the number of individuals involved and the projected cost, the creation of a secure juvenile detention center is not the best fit for Gibraltar or the most effective use of resources. Madam Speaker, I was assured that although there may be arguable benefits in certain circumstances to such a center these would need to be balanced with the reality that in the majority of the time the center would either be empty or just have one detainee who would in effect be in solitary confinement.

As such the focus must not be solely on what happens once a juvenile is convicted of a crime and sentenced to imprisonment but in trying to ensure that there is early intervention.

This is why, Madam Speaker, I will be refocusing the work from looking at a juvenile detention center, to working on ways that juvenile crime may be prevented through timely and early intervention in a manner which makes the best use of the resources available both outside and inside His Majesty’s Prison Windmill Hill.

I look forward to working on this with my Ministerial colleagues to ensure the best results for these individuals during the remainder of this parliamentary term.


Madam Speaker, the Probation team is committed to the delivery of services to the courts, prison and the Community. In 2023/2024 the two social work-trained Probation Officers worked closely with a range of stakeholders, service users and the wider community and voluntary sector to assist people with complex needs to lead constructive lives and help make Gibraltar a safer place.

The team has undertaken further training in risk assessment and management techniques, and along with colleagues in the RGP andCare Agency, play a key role in the multi-agency oversight and management of sex offenders in the community. These arrangements have received my direct support when I joined their training event in March 2024. The team has also benefited from professional supervision by a Fellow of the Probation Institute. During 23/24 the team has developed links with the Community Justice Overseas Territories Network and this has been an excellent opportunity to gain new skills and knowledge from other British Overseas Territories and also to share some of the good practice demonstrated in Gibraltar.

My thanks to Desmond Bell, Jessica Perez and Stuart Santos who run our Probation and Community Services.

Royal Gibraltar Police

Madam Speaker, for several reasons which I do not need to detail, the past year has been a challenging one for the Royal Gibraltar Police (RGP) and one of the key issues that they are facing is one of maintaining their complement.

I am pleased to be able to maintain an independent yet positive and professional relationship with both the Commissioner of Police, who I meet with regularly, and the Gibraltar Police Federation.

Of course, Madam Speaker, as Minister with responsibility for Justice my powers with respect to the financing and direction of the RGP are constrained and limited. However, as I have previously confirmed to this Parliament, His Majesty’s Government of Gibraltar has agreed with the Commissioner of Police that the Royal Gibraltar Police should not fall below the Complement Level, and that in the new budget year, they will be able to recruit above the Complement Level To maintain resilience. This Government has made that commitment clear, and it is one that is worth repeating today.

Evidence of this commitment can be seen in the fact that late last year the RGP employed 16 new police officers, who started their recruit training in September 2023 and are now operationally deployed. A further 12 police officers started their police recruit training in January 2024 and will be deployed in August 2024. A further recruitment campaign took place recently for 18 vacancies, with the successful candidates selected and starting their recruit school imminently.

Additionally,the RGP continues to fulfill its obligations to recruit 10 command and dispatch officers and five detention officers as part of the civilianisation of posts to release police officers back into frontline policing. Furthermore, a CrownCounsel has been recruited into the EconomicCrime Unit to assist in their work as well as specialized Financial Investigators; again, this is in addition to the RGP’s complement of officers.

Madam Speaker, as a result of the recent Armed Policing inspection carried out by His Majesty’s Inspectorate of Constabulary and Fire and Rescue Service, the RGP has strengthened its firearms capabilities and capacity in order to maintain its readiness to meet a wide range of terrorist threats and organized crime. This includes reaccreditation for existing firearms commanders to maintain 24/7 immediate response command capabilities. Madam Speaker, a major uplifting firearms officer is underway with specialized training being delivered locally. The RGP are also futureproofing the Force by ensuring that additional officers are qualified as firearms instructors.

Plans are in place to improve New Mole House Police Station, enhancing the working environment and providing much-needed space.

Despite the difficulties it faces, the RGP continues to work in all areas of policing. I would like to thank the Commissioner Richard Ullger, the Assistant Commissioner Cathal Yates, the Senior Command Team and all police officers and support staff. My thanks too, to the Gibraltar Police Federation for their constructive engagement with me over the last months.

Gibraltar Financial Intelligence Unit

Madam Speaker, as the central authority for the receipt, analysis and dissemination of financial intelligence, theGibraltar Financial Intelligence Unit(GFIU or Unit), led by its Director Edgar Lopez, continues to make significant progress across a broad range of areas in the global fight against money laundering, terrorist financing and proliferation financing.

The Unit’s digital transformation has continued, exploring options available using artificial intelligence and machine learning technologies that will allow the Unit to enhance its operational capacity.

Project Nexus, the Unit’s outreach and engagement program, was awarded the Government of Gibraltar’s best project in 2023. Through this initiative, the Unit has conducted numerous training sessions to the private and public sector.

Internationally, the Unit has become a strong and trusted international partner.

My thanks, Madam Speaker, to Edgar Lopez, Carl Ramagge and the rest of the team for the sterling work they do both locally and internationally.

Gibraltar Coordinating Centre for Criminal Intelligence and Drugs

Madam Speaker, the Gibraltar Coordinating Centre for Criminal Intelligence and Drugs (GCID) continues to make a significant contribution in the sharing of information and intelligence with Gibraltar lawEnforcementAgencies, in regards to serious crime, drug trafficking, money laundering and organized crime, which may involve persons or organizations who operate locally or outside Gibraltar’s jurisdiction with links to Gibraltar.

GCID continues to have seconded officers from the RGP, HM Customs and the Gibraltar Defence Police, with overall command and responsibility being held with the RGP.

My thanks, Madam Speaker, to Detective Sergeant James Rodriguez and the rest of the team for the great work they do.


Madam Speaker, following the on-site visit by the Financial Action Task Force (FATF) to Gibraltar in December 2023, I attended and addressed the FATF plenary in February this year and the FATF removed Gibraltar from the list of countries under increased monitoring (the so-called Grey List).

Gibraltar had already previously demonstrated that it had made sustainable progress in improving its standards across most of the recommendations made in the Mutual Evaluation Report of MoneyVal in 2019 with just two points outstanding at that time, namely, more enforcement actions by regulators and greater number of confiscations of criminal proceeds.

I have said this publicly before, but I would like to thank each stakeholder authority that contributed, through their hard work and commitment, to this deserved outcome.

This has been followed by an announcement last month that Gibraltar has achieved full or largely compliant ratings across all 40 FATF Recommendations in the Moneyval follow-up process and has exited all further follow up procedures of Moneyval under the current round. Such high standards of compliance is not frequently seen, even in FATF Member countries.

However, we cannot rest on our laurels. The political decision of the European Parliament to block the European Commission’s Delegated Regulation to remove Gibraltar from the EU’s own list creates an issue. 

I will work with the Commission on the next steps and I am assured that the Commission remains committed to delist Gibraltar from the EU list as soon as possible and to engage with us on the fight against money laundering and terrorism financing.

Of course, Madam Speaker, it almost goes without saying that the Moneyval Mutual Evaluation Report process is a continual cycle andGibraltarhas already been informed that the next evaluation will take place in 2027.

Madam Speaker, I Chair a Steering Committee, made up of all Gibraltar stakeholder authorities, on a monthly basis. Through this and other operational Interagency Working Groups I remain assured that Gibraltar continues to adhere to the highest international standards in this field despite international political obstacles that may be put in our way such as the decision of the European Parliament.

The Moneyval process has extended over seven years, Madam Speaker. From my professional experience, I know that there is such a thing as transaction fatigue in any prolonged M&A activity. Consequently, I understand that continuous efforts in these areas can have a similar effect. I have been involved for only eight months and find myself dedicating an inordinate amount of time to it, on top of all my other Ministerial responsibilities.

My thanks to Kevin Warwick, Richard Montado and all the organizations and individuals that form part of the various working groups, for their continued support in dealing with FATF/MoneyVal and Sanctions. Their work helps us all.


Madam Speaker, I turn now to my responsibilities in respect oftheRoyal Gibraltar PostOffice (Post Office).

Whilst last year saw changes at Senior Management level in the Post Office, the new management team has continued with the continuous improvement approach adopted in the department.

Madam Speaker, as previously announced by the Government, a new Mail Centre will be built at Bishop Caruana Road. The three-storey purpose built building will replace the existing temporary

facility at the Rooke Site. The new building will include all customer areas on the ground floor as well as parking and charging points for the Post Office’s electric vehicle fleet. In keeping with the Government's Manifesto commitment to a Green Gibraltar, the building will also incorporate a green roof. This significant investment serves to demonstrate this Government’s commitment to the improvement of working conditions to its staff, providing them with the best possible environment from which to deliver an optimum service to our people.

I would like to thank Peter Linares, Director of Postal Services and his team at the Post Office for their continued support and good work.


Finally, Madam Speaker, I turn to a key portfolio of mine, which is income and corporate tax under the Tax Office. This portfolio has normally been within the purview of successive Chief Ministers and I am grateful to the Chief Minister for entrusting me with this responsibility.

I would like to read a quote from Albert Bushnell Hart, a Harvard educated American historian, often described as the "Grand Old Man” of American history. This quote aligns to my own philosophy and beliefs:

“Taxation is the price which civilized communities pay for the opportunity of remaining civilized.”

This emphasizes not only the importance of tax revenue but also how imperative it is to safeguard this revenue from any existential threats. This is the only way we can ensure economic prosperity and preserve our nation’s macroeconomic interests.

Madam Speaker, tax is vital. Without it, we would be unable to pay for our public services and infrastructure.

That is why I have been vocal and persistent on the subject of increasing tax yield from big businesses in Gibraltar since taking Office. I have since announced in this House a ‘top-up tax’ for big businesses, and also separately taxed certain of their income that was previously and unfairly exempt from tax. I presented and therefore subjected both tax measures to scrutiny and debate in Parliament by way of Ministerial Statements, Madam Speaker. We purposely chose not to tax workers, which is what the Honourable Members across the floor of this House would have preferred given their initial reaction to what we were proposing.

The Honourable Chief Minister in his Budget address yesterday announced that personal tax rates would revert to their pre-2022 levels, effectively removing the 2% increase. To maintain the current tax rates would effectively have been an increase in personal taxation for the working population. We are not prepared to do this.

The Chief Minister also announced an increase in the corporate tax rate to 15%.

In his own Budget address, the Honourable Leader of the Opposition expressed concern that increasing the corporate tax rate to 15% could prompt gaming companies to leave Gibraltar. He stated he was skeptical and suggested that this move could be misguided, potentially causing Gibraltar to lose its competitive edge. He also asked me to comment on whether there had been consultation with the industry.

Even after increasing our corporate tax rate from 12.5% to 15%, Gibraltar remains generally highly competitive on a global scale. Many developed countries around the world have higher corporate tax rates, with these ranging from 20% to 30%. Specifically, as of 2023, the average corporate tax rate in OECD countries is approximately 23%. A 15% corporate tax rate therefore strikes the right balance between a competitively low rate allowing Gibraltar to continue to be attractive as a destination for businesses seeking to legitimately reduce their tax burden and aligning to international standards and the general direction of travel in global taxation and the harmonization of a minimum global tax rate.

Our Government does not expect this increase in corporate tax to be the direct driver causing operators in our financial services and gaming sectors to exit our jurisdiction. Many of these benefit from wider macroeconomic interests from Gibraltar, including the absence of VAT, Madam Speaker.

I can confirm to this House that the taxation measures announced in this Budget have indeed been modeled with available statistical information.

Madam Speaker, by moving to a 15% corporate tax rate, we are simply aligning ourselves with the OECD minimum corporate tax rate. Many of the large gaming operators are already Pillar 2 in scope companies paying 15% corporate tax at a group level, making this increase tax neutral for them. I must emphasize again (and will be addressing this specifically later in my Budget speech) that the majority of gaming and financial services companies are not paying any corporate tax because they are reporting massive tax losses, while others are only paying a very low amount of corporate tax.Small number of companies, as I have previously explained in thisHouse, are paying the majority of the corporate tax yield. Thus, the majority of companies will not be immediately impacted by the headline tax rate increase, Madam Speaker.

But that is why we are also implementing the tax measures I will announce today and those we have announced over the past months, on the last occasion with the support of Honourable Members Opposite.

We must be careful to avoid contradictions, Madam Speaker. We cannot say we need to restore financial stability and avoid taxing ordinary people while also refusing to require big businesses to pay their fair share of tax. That would be a financial fiction, and it is not possible. Hence, Madam Speaker, the further tax measures we are now announcing, which have been formulated after consulting with several operators, including some of the largest financial and economic contributors.

Our National Tax Strategy must enable the Government to proactively respond to changing economic conditions and unforeseen fiscal needs and help us manage economic stability and growth. This strategy should allow for adjustments to tax measures throughout the year as needed, a practice we have already begun to implement over the last 8 months.

Madam Speaker, we need to ensure our long-term economic success. That is why our efforts must focus on taxation. I will be outlining those tax initiatives we have undertaken in the last 8 months (none of which taxed workers) and others I will introduce shortly (again, without taxing workers).

Our Government’s tax strategy aims to optimize revenue through bespoke legislation, greater compliance and more inter-agency cooperation and collaboration, in particular to ensure that those generating wealth within our community contribute appropriately to tax revenues.

Tax Specialists

Madam Speaker, I am delighted to announce that the Income Tax Office now has two highly qualified and widely respected professionals on its team. These individuals bolster an already excellent team and provide the skill set and expertise to enhance the enforcement and compliance function, whilst seeking to reduce aggressive tax planning and optimize revenue.

This recruitment allows for internal up-skilling through on-the-job training to more junior team members and the development of a professional career in taxation. It opens up opportunities to collaborate with partner tax authorities so that the necessary expertise in complex areas of taxation such as transfer pricing may be developed.

This pivotal step in our tax strategy proves our commitment to serving the public interest, safeguarding our macroeconomic interests, and driving the right changes in taxpayer behavior through policy development and compliance activities.

I look forward to the positive impact they will undoubtedly make.

New Tax Measures

Madam Speaker, you will recall a tax bill that I brought to this Parliament in February 2024.

This Bill extended the remit of paragraph 15 of Schedule 3 to the Income Tax Act and provided certainty and clarity on the taxation of those sources of income generated by new technologies. This innovative approach of identifying gaps in our legislation underpins the very core of our tax policy. We can then focus our efforts on these specific areas for the benefit of our community.

A key principle of our tax strategy aims to ensure that any new legislation tackles issues that we perceive may pose a risk to our economic sustainability. Our solutions seek to ensure that large taxpayers pay their fair share of taxation towards our community for our shared benefit. This allows us to continue to support expenditure in our public sector, health service and education. This is a matter of macro-economic importance for Gibraltar.

In this regard, I echo the wise words of Arthur Vanderbilt, a well-known American judge and judicial reformer, who said:

“Taxes are the lifeblood of government and no taxpayer should be permitted to escape the payment of his justshare of the burden of contributing thereto.”

Madam Speaker, this concept of fiscal responsibility is at the heart of these new corporate tax measures we are introducing. Our intention is to drive economic prosperity through increased corporate tax revenue whilst also ensuring that we eliminate the possibility of exploiting tax advantages.

In April 2024, I revealed to both Parliament and the public that the financial sectors in Gibraltar had accumulated significant tax losses in excess of £2.1 billion. Closer study of our taxpayer demographic revealed two important observations.

These are (1) a clear example of the 80:20 rule; where a small number of licensed and regulated financial sector businesses contribute the majority of the Government’s corporate tax revenue and (2) the existence of some large multinationals in these financial sectors reporting small, and even nil, profits locally in comparison to significant profitability at group level. This is unacceptable and threatens the foundation of our fiscal sustainability.

Madam Speaker, this issue not only jeopardizes the Government’s recurring revenue, but also risks the viability of future cash flows. Gibraltar cannot, and will not, carry the reputational risk of licensed and regulated companies without the economic benefit to our community. Left unaddressed, it poses a clear and present risk to Gibraltar’s macro-economic interests.

For this reason, the first corporate tax measure I will be speaking about aims to preserve tax revenue in the light of such significant accumulated tax losses. This measure will limit the use of the losses available for carry forward, preventing the erosion of taxable profits by businesses with significant tax losses and delaying the payment of tax for years to come.

An overriding principle of this measure will be the continued ability to carry forward unutilised losses within the context of the regime. Similarly, the regime should permit current year losses to be deducted and is not intended to tax loss making businesses.

Madam Speaker, the regime will not increase tax burden. What we intend to change is when tax is paid and eliminate the complete erosion of taxable profits using carried forward accumulated losses (as previously stated, in excess of £2.1 Billion). This is not about the amount of tax. It is about the timing of tax and limiting the ability to push tax off into the far distance.

We have studied Gibraltar’s taxpayer base and economy carefully focusing on those industry sectors with the highest usage of carried forward tax losses. Our taxpayer study revealed that, as expected, our financial sectors are the most active industries.

In 2008, the United Kingdom limited the carried forward loss regime for the banking sector. Other jurisdictions do likewise. We have therefore taken a policy decision with the regime we will be introducing to limit it to those sectors comprising the bulk of the carries forward losses, namely the financial services and gaming sectors.

The regime does not remove the benefit obtained from those deductions, allowances or equivalent provisions introduced between 1st July 2020 and 31st July 2022. These very generous measures, designed to stimulate the economy remain.

This regime does not eliminate losses. They can continue to utilize accumulated losses prospectively albeit at a slower rate; one which allows and ensures a fair and proportionate economic contribution to our shared community.

Our studies have identified the economic risks for Gibraltar in this position and remain unaddressed. In our view, this is the legitimate aim and justification underpinning the initial implementation of this measure.

This is just one element of our National Tax Strategy and will only reach its maximum potential once all gaming and financial services operators are reporting profits. We are not there yet Madam Speaker. Our work through tax compliance enquiries and interventions must work concurrently with this measure. This is the only way in which we can address this critical issue.

This measure will be effective from 1 July 2024 and be immediately effective for returns filed after this date, irrespective of the actual accounting period being filed. This is necessary given some of the delayed filing positions observed in these sectors.

Madam Speaker, I now turn to the other new measure that will be introduced.

This one seeks to impose taxation on the profit or gains derived from property sales where any person holds three or more properties.

With the saturation of the property market in Gibraltar, the acquisition of property portfolios, including off-plan developments and the subsequent sale of these real estate assets is generating wealth. The purpose of this measure is to provide clarity and certainty regarding the taxation of this activity. Too often what is happening is people are trading in property but believing that this activity is outside the scope of our tax regime. It is trading income and we set out to clarify the law to allow such behavior to be taxed without costly enforcement action. That is why we will set the threshold for tax at the ownership of three or more properties other than a primary residence or other exempted property. We do not seek to tax those who have a small number of properties but instead those who effectively have a property trade and are generating substantial wealth from this. After long consideration, the threshold of three or more properties was felt to properly make that distinction.

Madam Speaker,the GSLP-Liberal Government has built more affordable homes than any previous administration. However, families buying a home are also competing against wealthy speculators, which drives up property prices. We are taking action against investors who treat our property market like a stock market, and we will not hesitate to introduce further measures if necessary.

We intend to introduce an anti-avoidance feature in this measure under which any person undertaking professional conveyancing activities on behalf of another holds a reporting obligation to notify the Income Tax Office. This will broadly be modeled on existing legislation regarding the requirement imposed on professional advisors to disclose reportable cross-border arrangements.

Given the composition of the property market in Gibraltar, we will ensure that suitable exemptions are included to ensure the measure is focussed and does not impose inadvertent or improper taxation.

Madam Speaker, with the inclusion of off-plan properties, we believe it is right to bring this part of the property sector in Gibraltar within taxation.We expect this to generate positive revenue flows.

This is once again a proportionate approach;one designed to tax the wealthy that are investing their funds by effectively trading in our real estate stock and then capitalizing on the resulting profits and gains benefitting from the absence, historically, of tax clarity on such transactions.

This measure will apply with effect from 1 July 2024.

Madam Speaker, these are the new tax measures that are to be introduced. I am pleased to announce that the relevant draft Bills are in the final stages of preparation and will be available shortly to be laid in Parliament for their first reading. My intention is also to provide explanatory notes to the business community at large so that these measures can be fully understood.

In addition to these new measures, our Government also intends to modernize aspects of current tax law.

Madam Speaker, this is the very essence of tax law evolution. It is necessary to adopt a dynamic approach to taxation and for our law machinery to be flexible to cater for both business and jurisdictional needs.

Firstly, I will turn to the living accommodation exemption available under Schedule 7 to the Income Tax Act 2010 for employees relocating to Gibraltar under pre-defined parameters.

Madam Speaker, we have received representations that the current provisions are out of date and are not an effective tool for local employers to use in competing globally to attract skilled employees to Gibraltar. Attracting the right people to Gibraltar is paramount for our success. We need the right people in the right jobs and our Government is committed to facilitating this. We have listened to the industry’s concerns and will be proposing changes, modernizing this in-line with our policy objective and the wider requirements.

Our proposal will seek to afford more flexibility by allowing the benefit to continue to apply even when the employee changes address or employment after having relocated to Gibraltar. This exemption is intended to assist employees in relocating to Gibraltar to take up employment. Consequently, Madam Speaker, this benefit will apply to accommodation in Gibraltar (and not in Spain).

Similarly, we will also review the duration of the exemption. Presently, this spans a 7-year period. Madam Speaker, this is too long for a relocation and so we will be reviewing this and aligning to a more reasonable period of time to reflect the intent of the exemption. We understand that the average duration of stay of such employees within particular business sectors does typically not extend beyond 3 or 4 years following their arrival to Gibraltar.

Aswith any regime change,we must endeavor to avoid inadvertent consequences. For this reason, transitional rules will need to be introduced to ensure a fair treatment for those individuals that are currently enjoying the benefit. Madam Speaker, whilst ensuring fair taxation is paramount, it is also necessary to ensure anti-abuse safeguards exist and compliance with the relevant filing obligations. These are being considered.

The other legislative amendment proposed seeks to maintain the tax status enjoyed by those students undertaking employment whilst avoiding inequity for standard employees.

Since 1 July 2015, those full-time students in part-time employment have been dealt with under a special status for both PAYE tax and Social Insurance purposes. Madam Speaker,this exempted the income earned by these students outside the vacation period. In other words, a full time student earning income outside the vacation periods from their part-time employment did not pay tax.

We are not proposing to tax students. Unfortunately, this generous measure designed to sustain and support our youth as the caretaker generation for our future has been abused. Owner-managed businesses are circumventing the obligation to pay PAYE tax and Social Insurance by inflating student family members’ salaries which are then returned to the same household.

Madam Speaker, this is absolutely disgraceful. Disgraceful but true.

For this reason, we will be tightening the conditions for this exemption. We need to stamp out this abuse and prevent others seeking to exploit meaningful measures for their own selfish benefit.

We will therefore seek to apply the income threshold of £11,450 to both tax and social insurance in relation to the income earned by students. This harmonizes the position and ensures equal taxation based on income and not the status of the individual concerned.

Madam Speaker, it will prevent individuals in full-time jobs, working hard to support their families and coping with the burden of taxation being placed in an inequitable position when considering some students enjoying tax-free earnings at the same level; often inflated artificially for tax avoidance purposes.

Madam Speaker, as with the new measures announced, these legislative amendments are in their final stages. I will bring them to this Parliament to be read shortly and once ready.

Top-up Tax

All Honourable Members will recall the important announcement I made in thisHouse in December 2023 regarding the introduction of a Qualifying Domestic Top-up Tax in Gibraltar as part of our Pillar 2 implementation plan.

The team at the Income Tax Office have engaged with the working group set up by the Government for this initiative and are presently considering the best way in which to introduce this significant and historic tax measure.

Similarly, we are continually engaging with the technical team at the OECD Secretariat to ensure that our initial implementation of our Pillar 2 plan is fully compliant and aligned to the requirements of the envisaged peer review process.

The implementation of Pillar 2 is complex and resource intensive and all efforts are currently focused on introducing the top-up tax by the end of 2024. We expect draft legislation for September, at which point a wider consultation will be undertaken with all relevant stakeholders. Our work on Pillar 2 will continue, Madam Speaker, with the implementation of the Income Inclusion Rule during 2025.

Madam Speaker, while I could share more on tax policy and the Tax Office's work, much of it is already public and to save time, further information can be made available online as necessary.

My sincere thanks,Madam Speaker, to John Lester, Commissioner ofIncomeTax, JulianBaldachino and the team at the Tax Office for the excellent work they do.


In conclusion, Madam speaker, over the last 8 months I have restructured my Department, taken cost out, and have introduced prudent tax measures with more announced today. This is in addition to the policy initiatives we have delivered. I remind this House that I have previously stated, and repeated here today, that we will, if necessary, introduce tax measures outside the annual budgetary cycle.

Most countries around the world face the same dilemma, Madam Speaker: whether to borrow more money or find new and sustainable sources of tax revenues, to match levels of public expenditure. If we do not manage expenditure and we do not introduce targeted tax measures, the cost of inaction will only increase in the future.

Yet, the Opposition’s reaction to the increase in the corporate tax rate (still one of the lowest in Europe) was to suggest that it was misguided, aiming (they, that is) to protect big business without regard to the underlying statistical information. No doubt, they will have the same to say today, Madam Speaker, about our proposal (1) to ensure that big businesses do not use accumulated tax losses to continue to avoid their tax responsibilities and (2) to tax wealthy property speculators. This reminds me of the words of Clement Attlee during the 1945 General Election, which Labour won by a landslide. Referring to the Conservative Party led by the great wartime Prime Minister Sir Winston Churchill, who went on to lose that election, Attlee said: “The Conservative Party is a party which stands for private enterprise, private profit, and private interests.”

Not us, Madam Speaker, we are raising taxes today from those who can and should pay, but across the floor of this House when it comes to taxation they, Madam Speaker, can be expected to prioritize the interest of the wealthy and powerful over the needs of the community. Make no mistake, their political instinct is not to look after the working class. I therefore make no apology for the tax measures we are announcing in this House today, and others that might follow in the future, Madam Speaker.

Finally, Madam Speaker, I must thank the team at my office led by Julian Baldachino, Principal Secretary, for looking after me and for their untiring work in supporting me as we strive to deliver our policy objectives. They all work in different areas, but each is critical to our progress. My sincere thanks to each of them. And my sincere thanks to Madam Speaker to the Chief Minister for his support and encouragement.

I now appreciate what my friend Albert Isola meant during the election campaign, Madam Speaker, when he said it is very difficult (if not impossible) to walk into these Ministerial portfolios without the professional experience and knowledge built over many years. And I did this Madam Speaker because, as I said during the Election, I wanted to help Gibraltar in what I knew were going to be very difficult times ahead.

Yesterday, when I listened to the Honourable Leader of the Opposition, who I admit I like as a person, I kept asking myself - what would his Party do in Government to manage expenditure, including public sector costs, and in order to raise the necessary taxation to pay for it, Madam Speaker? We must be able to engage constructively as Parliamentarians in this important debate, especially given the size of our country.