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Taxation
Income Tax (Amendment) Bill 2015
By Paul Stych, Senior Associate at PWC (Gibraltar)
either an audit or an independent accountants report to be filed with the tax office. The threshold for requiring an audit for branches is proposed in the Bill to be £1 million, although this will almost certainly change in light of the threshold increase announced during the most recent budget to £1.25 million.
Payments of account
Another administrative change comes in the form of the basis on which advance tax payments are made. The concept of advanced payments on account was introduced by the Income Tax Act and one that was, at the time, unfamiliar to companies in Gibraltar. Although, on the face of it, the introduction of the relevant accounting period may seem confusing, it has the benefit of allowing com- panies to consistently determine advanced payments on account taking into account an entity’s actual accounting period. Simply put, in many of the cases, payments on account in the current financial year are calculated based on a company’s tax liability from two years ago.
Deductions for construction costs
The Bill formalises the 2013 budget announcement in respect of costs relating to
After a couple of years of waiting the Income Tax (Amendment) Bill 2015 (the Bill) was finally published on 5 March this year. It has, however, not yet been
enacted as the Chief Minister confirmed during his budget speech on 22 June that he would be taking the opportunity to also include the amendments from his budget address in the Bill before it is finally enacted, so further amendments are expected. The original amendments in this Bill span a wide range of areas and cover amongst others, changes in administrative procedures to changes in transitional rules, a simplification of the imposing of penalties and, for the first time, a statutory audit requirement for taxable branches.
So, what are the changes?
Many in the industry will already be aware of these as some have been accepted practice for quite some time. The Bill is therefore, in some
cases a tidying up exercise. There are some significant changes and as with all tax legislation, it is long, and it is complex, but following is a summary, and hopefully, a help- ful guide to the main and, perhaps most inter- esting changes.
Change of statutory filing date for corporate Income Tax purposes Recognising businesses’ cash flow require- ments and providing more time to prepare financial statements, the date to file returns (and pay the tax due!) was extended to nine months. This brings every company in Gibraltar, whether requiring an audit or independent accountants report in line with each other. This change has actually already been applied administratively by the tax office since last year.
Audit of branches
Branches with taxable income in Gibraltar will now be subject to the same filing require- ments as companies. They will now require
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