Page 28 - Demo

28 Gibraltar International www.gibraltarinternational.comA delicate balance of revenue, expenditure, and surplusThe Budget forecasts recurrent revenue of %u00a3813.4m for 2024/25, up from %u00a3748.1m in 2023/24. Recurrent expenditure is forecasted at %u00a3803.6m, resulting in a modest surplus of %u00a39.78m. This surplus reflects the government%u2019s commitment to fiscal discipline and its refusal to borrow for day-to-day spending. As the Chief Minister stated emphatically, %u201cWe will not borrow to pay salaries. Day-to-day spending must be funded from day-to-day revenue%u201d.A key theme of the Budget was the management of Gibraltar%u2019s Covid pandemic debt. Of the %u00a3500m borrowed during the pandemic, %u00a31.5m had already been repaid. The government has committed to allocating at least 10% of each year%u2019s surplus toward debt repayment. Cash reserves remain healthy at %u00a3185m as of March 2025. Net public debt is expected to remain stable at %u00a3660m.Taxation and social insurance A reassuring aspect of the Budget was the stability in corporate and personal tax rates. There were no changes announced, with the corporate tax rate remaining at 15%. This continues to position Gibraltar as a competitive low-tax jurisdiction for international businesses. Gibraltar operates two alternative tax systems for individuals %u2013 the Gross Income Based System (GIBS) and the Allowance Based System (ABS). The system that applies to a taxpayer is the one that results in the lowest tax payable. Overall, income tax should not exceed 25%, with a few exceptions (certain types of income of non-residents is taxable at up to 39% - if you are a nonresident thinking of purchasing a buy-to-let in Gibraltar, get some tax advice first). Notably, there is no tax on capital gains or savings income, and no wealth or inheritance tax.As previously announced, the maximum cap on social insurance by employees and employers increased by 5% on the 1st July 2025. The maximum annual contribution is now %u00a32,121.21 and %u00a32,923.83 respectively. Transaction TaxNo changes to import duties were announced as it is planned that this will soon be replaced by a new %u2018Transaction Tax%u2019 on goods, as part of the proposed EU Treaty implementation. The Chief Minister confirmed that this will be phased in, over three years;%u2022 Year 1: 15%%u2022 Year 2: 16% %u2022 Year 3: 17%A reduced rate of 5% is to apply to goods such as children%u2019s clothing, works of art, antiques and bicycles.A super reduced rate of 0% is to apply to food, water supply, pharmaceuticals, medical equipment, newspapers and periodicals, solar panels and electricity Exemptions also apply to: %u2022 fuel for vessels and aircraft, %u2022 ships and aircraft supplies, %u2022 marine equipment for commercial use.Goods imported to Gibraltar, but not sold locally will also be exempt, preserving bonded operations.Social measuresNo significant Budget giveaways or none at all were announced this year, despite the Chief Minister%u2019s constant reminder of record-breaking revenues and a surplus three times as much as first forecasted. However, several measures aimed at promoting social equity were announced. The minimum wage was increased to %u00a39.50, a 6% increase from %u00a38.90. State pensions and disability benefits will increase by 3% in line with inflation, while occupational pensions increase by 2%. A new Living Wage Commission will be established to ensure that wage policies remain aligned with the cost of living.A vision of resilienceThe Chief Minister%u2019s speech was more than a fiscal roadmap; it was a reaffirmation of Gibraltar%u2019s identity as a resilient, forwardlooking economy. His opening words captured the tone of the entire announcement: %u201cStill standing, still governing, still delivering%u201d. This Budget is not just about numbers -it tells the story of a small but determined jurisdiction that has weathered storms and emerged stronger. For international investors, the message is clear: Gibraltar is not only surviving%u2014it is thriving, and doing so with discipline, innovation, and an unwavering commitment to its people and partners.Budget ReportContinued from p26www.ey.com/en_gi2023/24 2024/25 ForecastGDP %u00a32.9bn %u00a33.1bnGDP Growth +5.5% +6.5%Recurrent Revenue %u00a3748.1m %u00a3813.4mRecurrent Expenditure %u00a3744.5m %u00a3803.6mSurplus %u00a31.9m %u00a39.78m