Gibraltar transition from tax haven paying off: leader

27th September 2010, Comments 0 comments

Gibraltar's Chief Minister Peter Caruana said Monday that the enclave's sound reputation was paying dividends as it transforms its economy from European tax haven to financial services hub.

Caruana told AFP that the British territory was going for quality rather than quantity of businesses setting up on the tiny Mediterranean peninsula as its new tax regime kicks in.

From January, offshore companies will pay the same 10 percent tax rate as Gibraltarian firms.

"It's a low rate and we hope companies will find it attractive," said Caruana, who was visiting the British opposition Labour Party's annual conference in Manchester, northwest England, which had its first full day on Monday.

He said: "We do need to make our little corner of Europe look as normal as possible.

"We are consolidating our economy, which has gone through a huge transition in the last 15 years from tax havenism to mainstream European financial services.

"We've adopted as the core of our economic development -- in financial services, online gaming or in shipping, where Gibraltar has leading global positions -- high standards of regulation and supervision."

Caruana said that if small places such as Gibraltar fail to establish a "reputation for soundness ... reputable companies just don't want to be established in your territory.

"That's paid huge dividends for us, not just in financial services but in online gaming. We turn away most of the people who come asking to set up in Gibraltar.

"Because it's such a small place, we don't need a huge amount of quantity of economic activity, we can go for the quality. It's a lucky position to be in."

Caruana also said Gibraltar was enjoying the normalisation of relations with its neighbour Spain but a "crazy" border toll planned by the mayor of La Linea over the frontier was having a detrimental effect on goodwill.

"It's doing a huge amount of damage to the cross-border chemistry," he said.

"This just goes against the grain and gets people's backs up.

"Whilst he does not abandon it, the speculation continues and bad will continues to develop."

Spain ceded Gibraltar to Britain in 1713 but has long argued that it should be returned to Spanish sovereignty. London says it will not do so against the wishes of Gibraltarians, who are fiercely pro-British.

© 2010 AFP

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