On 10 April 2025, Gibraltar's Government published a tax amendment bill (the Bill) to amend Gibraltar's Income Tax Act 2010 (the Act) to update how "tax avoidance" is defined and what powers the Commissioner of Income Tax has with respect to tax avoidance arrangements

Key points in the proposals are highlighted below.

The Commissioner of Income Tax may counteract or disregard any tax advantage that a person obtains from a "tax avoidance arrangement." A tax avoidance arrangement is defined as an arrangement that directly or indirectly shows any one of the following:

• The purpose or one of the main purposes of the arrangement is to obtain a tax advantage.
• The arrangement results in a tax advantage not consistent with the intention of the relevant tax provisions.
• The arrangement undermines the objectives of the Act.

As is currently the case, the anti-avoidance provisions in the Act are to be construed in a manner as best secures consistency with both:

• Internationally accepted principles for determining profit from activities within a multinational group of companies
• Transfer pricing guidelines published by the Organisation for Economic Co-operation and Development (OECD)

The Commissioner of Income Tax may refer any person to their professional or regulatory body if the Commissioner believes the person:

• Has submitted, or assisted with the submission of a tax return that they know or suspect may be inaccurate and have deliberately withheld this suspicion from the Commissioner
• Is promoting, facilitating or advising on a tax avoidance arrangement that contravenes the spirit and purpose of the Act
• Is considered to have acted with a conflict of interest, i.e., providing professional services while having a financial, personal or other interest that impairs their objectivity or duty of care

In connection with the list directly above, the burden of proof rests with the person to demonstrate that an arrangement was not designed, marketed or implemented for tax avoidance purposes.

The Act gives the Commissioner the power to counteract or disregard a tax avoidance arrangement or deferral of tax by the accumulation of profits in a company followed by the voluntary liquidation of the company. In these cases, the proceeds of the liquidation shall be deemed to be dividends paid by the company to the shareholders. This would apply to profits accumulated after the proposed change to the Act takes effect. This is unlikely to have an impact on international structures, as dividends paid between companies, or paid to nonresident persons are not generally taxable in Gibraltar.

The Commissioner may counteract or disregard the "income from occasional presence" exemption in the Act if the Commissioner believes the amount lacks economic reality. This exemption is in respect of directors' fees and certain other employment income of nonresidents who are present in Gibraltar at any point in fewer than 30 days during the tax year (i.e., presence for any part of a day counts toward the 30 days).