Changes to the Gibraltar Income Tax Act

Following the article in the last edition B2B on changes to the Income Tax (Amendment) Act 2015 which introduced a requirement for all Gibraltar-registered companies to file a tax return has highlighted other changes on the filing obligations for companies incorporated in Gibraltar that declare dividends.

For accounting periods ending on or after 1 January 2016, every company incorporated in Gibraltar (with the exception of those that are listed on a Recognised Stock Exchange) that declares a dividend must file a return within nine months after the end of the accounting period in which the dividend was declared. Companies declaring dividends in favour of shareholders who are ordinarily resident in Gibraltar or another company incorporated in Gibraltar must provide such shareholders with additional information. This is the amount of tax credit and the dividend entitlement divided between that part paid out of profits chargeable to tax in Gibraltar and that part paid out of profits which is not chargeable to tax. This information must also be provided within nine months of the end of the accounting period in which the dividend was declared.

Where companies were formerly deemed to have paid dividends from their taxable profits or reserves before other profits or reserves, dividends which are declared under the new rules will be deemed to have been distributed proportionally from profits chargeable to tax and profits not so chargeable to tax.

This change will entail a further compliance burden for local companies which declare dividends. The Income Tax Office has stated that regulations and guidance notes are to be published to assist in the preparation of returns.

KPMG will send the guidance notes on request when they are issued and says that it is happy to assist any local company with the preparation and filing of returns which may be necessary as a result of this new legislation.

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