KPMG Tax Update for Gibraltarians

Around 80 local professionals packed into the two latest KPMG Tax Updates at the Sunborn hotel on Tuesday 6 October to hear a range of speakers address various local and international tax issues. The first session was a general look at the Gibraltarian and UK tax landscapes, with the second focusing more specifically on the eGaming sector. The morning’s presentations were enlivened by frequent audience participation as the speakers sought delegates’ views in the form of live polling via their mobile devices – sometimes with surprising results!

KPMG’s director of taxation in Gibraltar, Greg Jones, began proceedings with a selection of one-liners to prove that tax did not always have to be serious! However, Mr Jones then went on to analyse the less welcome recent proposals of the UK Chancellor George Osborne, which make it more difficult to acquire and retain non-domicile status in the UK, particularly for those who were actually born in the UK in the first place who then go to live abroad. Mr Jones also outlined the proposal to bring all UK residential property within the scope of UK inheritance tax with effect from 6 April 2017, a development which Mr Jones described as a “game-changer” for non-UK domiciles.

Tom Lobb, KPMG UK’s director of corporate taxation based in London, then spoke about how the changing international corporate tax landscape is likely to impact online gaming companies. In particular, said Mr Lobb, the OECD’s action plan on BEPS (Base Erosion and Profit Shifting) will lead to significant change in areas such as the definition of “permanent establishment” (which is the basis on which foreign companies pay tax in the UK) and the operation of transfer pricing rules. Mr Lobb then explained how the UK’s Diverted Profits Tax rules could impact online gaming companies and gave practical advice on how best to comply with the new regime. These rules were introduced in April 2015 and have been influenced by the OECD’s proposals.

Sandra Skuszka, head of VAT services for KPMG in Gibraltar, was next to speak. Ms Skuszka reminded the delegates that the VAT rules relating to the place of supply on electronically supplied services changed in January 2015 and could have significant compliance consequences for Gibraltar companies with overseas customers. She also outlined the UK government’s VAT proposals relating to the use and enjoyment of advertising services, which could similarly affect many Gibraltar businesses. Finally, Ms Skuszka cautioned against creating a fixed establishment in the UK for VAT purposes and outlined how this might arise in certain cases as a result of a recent decision of the courts.

Local tax senior manager Darren Anton closed proceedings with an outline of the Gibraltar government’s 2015 Budget tax proposals and recent amendments to the income tax legislation, together with changes for Category 2 residents and those working in Gibraltar under the HEPSS (High Executive Possessing Specialist Skills rules).

The afternoon session was hugely important for many of the delegates because of the size and significance of the eGaming sector for Gibraltar. As tax regulation of the sector becomes more complex, sector specific support is becoming more essential. The event was opened by Jon Tricker who has recently been appointed Managing Director for KPMG Gibraltar. First up again was Tom Lobb who discussed the Diverted Profits Tax implications and how they could apply to gaming operators. Adam Rivers from the KPMG UK economics team encouraged some interesting discussion on the effect of the point of consumption tax and KPMG’s new potential for processing big data. Lawrence Hanlin enlightened the audience to the implications of Anti Money Laundering regulations for eGaming operators and Sandra Skuszka set the scene for an interesting debate on the potential changes to VAT legislation for a panel of KPMG experts hosted by Archie Watt, who leads the eGaming team for KPMG Gibraltar and Isle of Man. The panel consisted of KPMG experts Mike Camburn UK VAT, Francisco De La Puente Perales KPMG Spain, Sandra Skuszka and Tom Lobb. The event closed with some drinks and canapes.