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Great expectations that court ruling will favour Gibraltar
? But will this be the end of finance centre woes?
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There is general expectation in the finance centre, as well as in the Government and Opposition, that the European court ruling later this month will favour Gibraltar.
The State Aid ruling will decide if Gibraltar is deemed to be treated as an area where 'material selectivity' applies or if it is an area where 'regional selectivity' applies.
If the court ruling opts for 'material selectivity' it would mean that Gibraltar could have a different tax structure to the UK. This is what Gibraltar is hoping for.
However, in getting rid of the tax-exempt company, where offshore companies paid no tax, a 10% tax is planned. The tax-exempt company was given marching out orders in another ruling, which shows to what extent the finance centre is under attack.
If the court were to decide for 'regional selectivity' this would mean that Gibraltar would not be able to have a tax structure different to the UK. This would cause havoc to the finance centre and to Government financial possibilities.
The expectation that exists that the ruling will favour Gibraltar follows other rulings concerning other areas, but of course there are those who say that one never knows what the court will decide.
It is not clear if the Government's optimism is based on expectation or on having been told which way things will go.
One way or the other, the fact of the matter is that what are known as tax havens, and in that category Gibraltar is featured, have their days counted, moreso as the G20 prepares to provide detailed rules which, it is said, will want to get rid of low taxes to aid the world financial situation.
The situation is thus quite fluid. The G20 will meet next April and then the situation ought to be clearer.
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