Gibraltar: Extension of grants, relief for businesses (COVID-19)

Gibraltar: Extension of grants, relief for businesses

The Chief Minister announced the continuation of business measures in response to the coronavirus (COVID-19) pandemic. The COVID-19 relief measures are effective from 1 December 2020 to 31 March 2021.

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COVID-19 grants

As under the previous relief program, grant payments will continue to be made to provide as support for businesses and to help them meet their ordinary business expenses, but the level of the grants will increase from the previous 20% (November 2020) to 30%. These "enhance" grants will be paid until 31 March 2021 with the amount continuing to be based on the average payment that the business received in April to June 2020. Businesses that were able to participate in previous schemes will be receiving emails so that they can confirm their participation (by midnight on 18 December 2020) and the first payments are expected to be made in the week commencing 21 December 2020. All remaining payments will then continue to be made at the end of each relevant calendar month.
 

Grant conditions

  • The grant must be solely and exclusively for meeting the necessary costs and expenses incurred in the ordinary course of business. Declaring or charging a bonus or dividend will not be allowed.
  • Businesses in receipt of payments are required to keep any employee terminations within a fixed threshold. The employee termination threshold that was previously 30% is now being increased to 50% for wholesale, retail, hotels, bars, and restaurant sectors.

The breach of any of these conditions will automatically convert the grant payments into an interest-bearing loan to be repaid over a five-year period (repayable in equal monthly instalments to cover capital and interest on a reducing balance basis). In the event of insolvency, any COVID-19 grant payment will be deemed to be a preferential debt due to the government for purposes of the Insolvency Act.
 

Rates

The government will continue to offer a further 25% discount on its early payment discount scheme for rates on commercial property across all sectors (apart from supermarkets and pharmacies). In addition, a rate-waiver has been announced for the period from 1 January 2021 to 31 March 2021 for all businesses in the wholesale, retail, hotels, bars, and restaurant sectors that are up to date with their rates payments.
 

Rents

The government will continue to apply a 50% discount to all its commercial tenants in relevant sectors.

The government is again encouraging private landlords to give businesses in the relevant sectors a rent discount of 25% for the whole of the first quarter of 2021. If such rent discounts are not granted, the government will apply a tax of three-times to that part of the rent that the landlord has refused to discount, and the tenants will be entitled to a three-times reduction from their tax assessment of that unreduced element of rent.

This is intended to be the last quarter for this rental discount scheme for private landlords. Any rental increases due in any commercial premises are suspended and this applies to government commercial tenancies as well as private landlords and their commercial tenants (the tenant must not have rent arrears). 
 

Other measures

  • The waiver of tables and chairs license fees will continue.
  • The import duty waiver scheme will continue for all commercial imports (with this waiver not applying to cars, fuel, building materials, alcohol, tobacco, and disposable single-use plastic products when there is a higher duty regime in place, for instance regarding plastic plates and straws).
  • The government will continue to waive work-permit and registration and administrative fees.
  • Business, in distress solely as a result from the pandemic, may be able to take advantage of a business-disruption loan guarantee scheme.


For more information, contact a KPMG tax professional in Gibraltar:

Darren Anton | +350 200 48600 | darrenanton@kpmg.gi

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