Gibraltar Issues Simplification Measure for MNEs to Simplify Global Minimum Tax Compliance

On February 20, 2025, Gibraltar issued the Income Tax (Allowances, Deductions, and Exemptions) (Amendment) Rules 2025.

This provides that a Gibraltar Parent Entity that is within scope of the provisions of the Income Tax Act 2010 and the Global Minimum Tax Act 2024 can elect that the provisions of the Income Tax Act 2010 that levy a charge to tax will not apply to the Gibraltar Parent Entity or the Constituent Entities of that Group and only the Global Minimum Tax Act 2024 will apply.

Under Section 3 of the Rules, a “Gibraltar Parent Entity” is defined as:

-a Constituent Entity of a Group that is ordinarily resident in Gibraltar under the Income Tax Act 2010; or

-an Ultimate Parent Entity registered or otherwise established in Gibraltar.

The terms “Constituent Entity”, “Group” and “Ultimate Parent Entity” have the meanings given in the Global Minimum Tax Act 2024 or the OECD Model Rules.

Given that Gibraltar’s corporate income tax rate under Income Tax Act 2010 is 15%, this is designed as a simplification measure to allow MNEs to be taxed under a single regime.

The election must be made in writing and approved by the tax authority. Once approval is given the election, it applies for accounting periods commencing after the date the election is made. If the MNE group subsequently falls out of scope of the Pillar 2 rules, this must be notified to the Tax Authority.