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Gibraltar

Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 30 September, 2020

Tax measures – Direct and Indirect

(e.g. payment deferrals, rate reductions…)

Click here to see a comprehensive summary of jurisdictional tax measures and government reliefs in response to COVID-19.

Employment-related measures

(e.g. state compensation schemes, training…)

Business and employee assistance terms

  • The COVID-19-related salary is £1,155 per month in relation to a full-time employee (working 7.5 hours per day or more) or a self-employed person, and would be apportioned for those who work less than full-time or are on zero-hours contracts.
  • The COVID-19-related salary is not subject to income tax (whatever the cumulative income of the individual over the year of assessment) or a social insurance deduction on the part of the employer, the employee or the self-employed person (but social insurance would be deemed as paid for the purposes of that individual’s records). 
  • The amounts for the COVID-19-related salaries will be received by employers and the self-employed during the last week of each month during the “COVID-19 period” starting from the last week in April 2020—thereby allowing employers to pass these Covid-19- related salaries to employees in April (therefore, March salaries are still expected to be paid by employers as usual).  This payment will initially be only for April 2020, but the government is also making arrangements so that these payments can continue, if necessary, in May and June 2020. 
  • Any terminations of employment registered by companies from 15 March 2020 will not be allowed without the specific consent of the Director of Employment, and this consent will only be granted in exceptional circumstances. 

PAYE and social insurance

  • All sectors will be subject to the usual “pay as your earn” (PAYE) and social insurance obligations with effect from 1 July 2020.
  • Any PAYE and social insurance deferred during the second quarter of 2020 will need to be repaid before 31 March 2021. Firms will therefore be able to gradually repay the deferred taxes over this period, and arrangements for these repayments will need to be coordinated by the Central Arrears Unit in collaboration with the Income Tax Office (ITO).

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

The Chief Minister announced a grant program as support for businesses in further response to the coronavirus (COVID-19) pandemic. The effective date of the measures for these COVID-19 grants is 1 July 2020.

COVID-19 grants

  • 20% of average BEAT Payments will continue for October and November for those firms that have complied with the BEAT 2.0 conditions, and are complying with all other relevant guidelines and rules.

COVID-19 grant conditions

  • The grant is solely and exclusively to be used for meeting the necessary costs and expenses incurred in the ordinary course of business. Declaring or charging a bonus or dividend for a period of at least six months from 1 July 2020 will not be allowed.
  • Businesses can terminate employment contracts with effect from 1 July 2020, but not more than 30% of the total number of employees for the third quarter (any business that terminates more than 30% of its workforce at any time during the next six months from 1 July 2020 will automatically have their new “business and employee assistance terms” grant converted into a loan). Seven days of prior notice, in writing, to the Director of Employment of the employment terminations is required. The government will also retain the ability and discretion to adjust pro-rata subsequent payments, having regard to the number of terminations, and this may apply even if these terminations are within the 30% threshold.
  • No unregistered labour is allowed (further grant payments will also be suspended). The government announced a one-month amnesty for the month of July to enable all firms to determine that their employees are properly registered.
  • 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 an insolvency proceeding, any COVID-19 grant payment will be a preferential debt due to government for the purposes of the Insolvency Act.

Discounts for rates on commercial property

  • Discounts on rates will continue for the fourth quarter of this year. This provides a 25% discount on rates, which when added to the early repayment discount already in place allows traders to take advantage of a total discount of 50% on rates.

Rents

  • Government rents continue to be reduced by 50% and private rents reduced by a 25% discount at least (only applies to businesses in relevant sectors). Additionally, all rental increases will continue to be suspended by the Government until 1st April 2021.

Terminations

  • As from 1 July 2020, all businesses that have not benefited from the COVID-19 payments will be able to process terminations in the normal manner.

Customs Measures

  • Adjustments to Import Duty will continue at least until the end of the fourth quarter of the year.

Contact us

Tax: Darren Anton – darrenanton@kpmg.gi