Introduction
Peter Caruana
|
In
January this year, Gibraltar's Chief Minister,
Peter Caruana, was able to say in his New Year
message: "2000 has generally been a good
year for Gibraltar, although, as always, there
have been many difficult issues to deal with."
He
was able to highlight a range of domestic and
international issues on which there had been notable
progress in 2000, including modernisation of the
built environment, successful growth of the Finance
Centre and e-commerce gaming, continued low unemployment,
the imminence of progress on the telephone numbers
problem and the recognition of Gibraltarians'
rights in the EU. |
Mr
Caruana was justifiably pleased at the level of UK assistance
and pressure that had led to the resolution of a number
of outstanding issues with the EU, and when in July
the British Foreign Secretary, Jack Straw and the Spanish
Minister of Foreign Affairs, Josep Pique i Camps, met
in London to relaunch talks about Gibraltar's status
under the 'Brussels Declaration', he may have felt that
Gibraltar's long march towards stable independence was
nearing its end.
How
different the world now looks to Gibraltar, just three
months later! The UK's apparently wilful failure to
prevent Gibraltar's exclusion from the European Single
Sky, and what is seen on the Rock as its craven acceptance
of Spanish conditions for continued sovereignty negotiations
led to the biggest ever anti-British demonstration in
Gibraltar in October, with bi-partisan support. And
the UK has also signally avoided giving any help to
Gibraltar in its travails with the EU over its offshore
regime - Gibraltar is desperately trying to preserve
its competitive advantages while remaining within the
EU, something that is beginning to look increasingly
difficult, especially with a Spanish presidency of the
EU on the horizon.
The
events of September 11th, while not directly affecting
life and limb in Gibraltar, are nonetheless very unhelpful
to the colony, which is highly dependent on tourism
and the travel sector generally.
So
all in all, Gibraltar feels that it is fighting for
its life with precious little help from its mother country
and Mr Caruana would be less than human if he was not
wondering almost out loud whether the time has not come
for a step towards greater independence.
The Economy
| Gibraltar's
economy used to be substantially dominated by the
British naval dockyard and military presence, but
major cut-backs over the last 20 years have reduced
the share of such expenditure to a small fraction
of the local economy. Magnificent port facilities
remain, so that shipping and tourism are the mainstays
of the economy. More than 5m people visit Gibraltar
annually, many of them evidently stepping ashore
from cruise liners. |
|
Gibraltar's
GDP of about $500m gives GDP per head of about $17,500.
Unemployment used to be a problem after the British
left, but there are now fewer than 300 unemployed -
not bad in a population of 28,000.
The
Government pins its hopes for the future on the financial
services sector, which has been growing rapidly. When
agreement was finally reached between the British and
Spanish Governments in April, 2000, to allow Gibraltar
a full range of freedoms under the EU's single market,
it was hoped that there would be a substantial boost
to the banking, insurance and fund management sectors
from firms wanting to base themselves in a low-tax area
while being able use the passporting provisions of the
single market directives, but this has not happened.
Locals speculate that this is because most large companies
had already placed their bets, so to speak, in competitor
areas such as the Irish International Financial Services
Centre in Dublin and in Luxembourg.
Nonetheless,
the Finance Centre, the name given by the Government
to the whole cluster of low-tax regimes including Exempt
and Qualifying Companies is viewed with high importance:
"No one in Gibraltar," said the Chief Minister,
"whether they work directly in the Finance Centre
or not should underestimate how important the Finance
Centre is to the economic, and therefore to the social
and political prosperity, and indeed survival, of Gibraltar."
"The
Finance Centre provides vast numbers of jobs in Gibraltar.
Probably as many as 5,000 jobs depend, directly or indirectly,
on the Finance Centre. These people are, in turn, customers
of other businesses. Finance Centre companies are themselves
customers of many other businesses in Gibraltar. The
tax and PAYE collected by Government from the Finance
Centre pays for many public sector jobs, for many public
services and for much public investment. The Finance
Centre is an important mainstay of the private sector
and therefore of the economy."
| The
Chief Minister said these things because he foresaw,
accurately, that it would be necessary in 2001 to
make significant changes to the Finance Centre's
tax regimes in order to placate the OECD and the
EU. In October 2001 anxious discussions were continuing
to take place between the Government, business and
the EU in the attempt to forge a new, non-discriminatory
tax regime which would preserve at least the bulk
of Gibraltar's international appeal. |
|
However
much the Government pins its future hopes on the Finance
Centre, the day-to-day reality at present is that tourists
and shipping provide the bulk of Gibraltar's income.
Permanent inhabitants, at least those who don't own
souvenir shops, detest the ever-present hordes of visitors,
but would have to pay much higher taxes without them.
The slowdown in world travel after September 11th has
had a severe impact on Gibraltar's tourist trade - no
doubt things will pick up again, but the numbers for
2001 probably won't make very nice reading.
The
Government hasn't yet issued a 'profits warning' for
the economy in 2001, but its budgetary expectations
are surely being dented by the current situation. Originally,
the turnover of the Government for 2001/2002 was expected
to total £216 million, with total spending including
capital expenditure of £25m leaving a surplus
of £6m. Recurrent revenue however amounts to only
about £190m, so that a relatively minor fall in
tax collections would put spending programmes under
strain.
It's
difficult to predict the future for Gibraltar's economy.
If the Government follows its current path towards accommodation
with the EU and the OECD, it seems a brave assessment
that the Finance Centre will continue to grow, given
the competition from no-tax areas such as Dubai. As
an e-commerce base for trading into the EU, the future
may be rosier, but Gibraltar may be forced to rely more
on its historical geographic advantage than it would
really prefer. The cruise ships will continue to call,
and intensive development of the already superb, but
under-utilised port facilities together with associated
light manufacturing will sustain employment.
The Government points out that well below 10% of the
70,000 ships that sail annually through the Strait of
Gibraltar currently call at the Rock's port. For some
time, the Government has been poised to take decisions
about becoming a major container transhipment port.
There are several arguments in favour of this idea.
Although the Mediterranean in general probably has too
many ports vying with each other to be major regional
hubs, Gibraltar's geographical position would enable
it to fulfil a role which is open only to a few: line-linking.
A
substantial portion of the containers passing through
Algeciras, on the other side of Gibraltar Bay, are transhipped
from vessels on north-south routes, serving South America
and Africa, to those on east-west voyages through the
Mediterranean and vice versa. Tangier also has hopes
to develop a transhipment centre, but experts suggest
that building a terminal in Gibraltar would be far more
economical, though still expected to cost in excess
of £180 million.
If
Gibraltar did become a line-linking centre it would
also probably develop a network of regional feeder services.
The increased traffic through the port would boost all
the ancillary service providers and would create between
200 to 250 permanent jobs once up and running. It would
also help reduce the port's current reliance on the
bunker market. Numbers of ships calling for bunkers
have risen from under 1,000 to over 3,000 in less than
a decade.
Alongside
the port itself, the
Government of Gibraltar is promoting awareness of Gibraltar
as an attractive manufacturing and distribution centre
for non-European companies seeking to develop and maintain
trading relationships within the Single European Market.
The New Harbours, a free-port zone, where special benefits
apply, comprises warehousing, industrial workshops and
office space, is available for rental/purchase on a
short or long lease term to exporting companies. The
accommodation consisting of a total of 107 industrial/commercial
units, is well suited to light manufacturing operations
and among the advantages to companies locating there
are absence of duties and taxes on imported materials,
components and equipment, low rates of tax - on net
profits, and rates holidays. These are also further
facilities under construction. A new industrial park
at the site of Lathbury Barracks (to consist of 48 units)
and new premises in the area of the Port, will add to
the infrastructure available to accommodate new economic
activity.
Gibraltar's Finance Centre
The
'Finance Centre' describes the set of corporate vehicles
and the accompanying tax regimes that make Gibraltar
an attractive location for international companies wanting
to carry out a wide variety of activities, certainly
including banking, insurance, fund management and a
number of other types of 'financial' operation, but
by no means limited to finance. The essence of the Finance
Centre is that it offers better terms than apply to
local companies operating in the domestic market, and
it's exactly this that the OECD calls 'discriminatory'
or 'unfair', and the EU calls 'harmful'.
| |
Gibraltar
would have it that only companies with essentially
non-domestic operations are offered the benefits
of the Finance Centre, and that many countries distinguish
between the taxation of domestic and non-domestic
operations. Even though the OECD has backed off
its attack on low tax rates as such, it is still
trying to dismantle discriminatory regimes; and
the EU, whatever language it uses, is simply trying
to destroy low-tax competition. So Gibraltar has
a fight on its hands. |
The
key corporate forms allowing low-tax operations in the
Finance Centre are the exempt and qualifying companies.
Gibraltar was the first European financial centre to
introduce the exempt company as an offshore holding
vehicle, and its unique status among IOFCs in relation
to the EU has made it the jurisdiction of choice for
certain types of investor or trader: there are over
60,000 companies registered in Gibraltar (more than
two per inhabitant!) many of them being exempt. Many
of these companies were set up to hold Spanish property
investments during a boom in such purchases in the 1980s.
The
low set up cost of exempt companiers makes them ideal
for property and investment holding, international trading
and sales agencies, particularly if trade is being carried
on between two high tax jurisdictions. An exempt company
may be either incorporated in Gibraltar under the Gibraltar
Companies Ordinance, or incorporated outside Gibraltar
but registered as an overseas company under Part IX
of the Companies Ordinance. If a company obtains exempt
status, the company will be exempt from corporate tax
and stamp duty (save in certain specific instances)
in Gibraltar under the Companies (Taxation and Concessions
Ordinance) 1984 (as amended).
Shares
in an exempt company may be transmitted free of estate
and stamp duty on the death of the shareholder. An exempt
company pays a flat rate annual fee regardless of profits.
A company incorporated in Gibraltar which is ordinarily
resident pays a flat rate fee of £225 per annum,
whilst a non-resident company incorporates outside Gibraltar
pays a flat rate fee of £200. Fees payable to
non-resident directors and dividends paid to its shareholders
are not subject to a withholding tax.
An exempt company must not, without the approval of
the Financial and Development Secretary, carry on any
trade or business in Gibraltar or with Gibraltarians
or residents of Gibraltar except where these are other
exempt companies. An exempt company may, however, manage
and control its business from Gibraltar and have an
office and staff locally.
The
qualifying company is a variant of the exempt company,
and pays tax on its profits at a rate agreed with the
Financial and Development Secretary and stated on a
certificate issued to the company. A qualifying company
certificate is valid for 25 years from the date of issue.
According
to the legislation, a Qualifying Company pays tax at
a rate (between 1% and 35%) to be agreed between the
company and the authorities. This type of 'designer'
tax arrangement is intended to allow a company to slide
under the bar of its home tax regime by paying just
the amount of tax required to escape anti-avoidance
rules. In practice most Qualifying Companies nowadays
agree to pay between 5% and 10% tax, and the form has
perhaps become more the standard Gibraltar low-tax offshore
entity for significant trading companies.
The
Gibraltar Government understood early on that it was
going to have to adjust its low-tax regimes in order
to reach an accommodation with the OECD and the EU,
but it did not anticipate the ferocity of the EU's demands,
nor did it anticipate that the UK would leave it to
fight the battle entirely without support from London.
At first the Government assumed that it would be able
to adopt a uniform taxation regime applying to all companies,
with tax at perhaps 10% or thereabouts, comparing well
with Ireland's 12.5% (as agreed by the EU), but discussions
with the business sector were more difficult than expected,
and the Government found itself having to consider a
zero taxation regime for all companies. That in turn
however is highly problematic for the Government's overall
finances.
Speaking
to the local media, Peter Caruana, the Chief Minister
said that it would not be prudent to extend exempt status
to all companies in Gibraltar stating that, "even
if the amount of money we took from companies was the
same as our budget surplus, so that we could theoretically
let it go altogether, it would not be prudent to do
so." That, he said, could lead to a dependence
on revenue from tobacco which could be taken away at
anytime.
Mario Monti |
The
EU's attack came in September 2001, when EU Competition
Commissioner, Mario Monti, speaking before the
Economic and Monetary Affairs Committee, announced
that the Commission had launched 'formal investigations'
into tax provisions in nine countries which it
deems to be unfair. Offshore and onshore jurisdictions
were, for a change, fairly evenly represented
in Mr Monti's hall of shame, which included Germany,
Spain, France, Ireland, Luxembourg, the Netherlands,
Finland, the United Kingdom, and Gibraltar.
Mario
Monti made little additional comment on any of
the investigations other than that examining the
exempt offshore companies' rules in Gibraltar,
which he said merited inclusion in the list because
of doubts as to whether existing provisions were
compatible with EU rules. The Competition Commissioner
then said that the purpose of the investigations
was not to challenge legitimate lower tax rates,
but to eradicate 'harmful' tax regimes that distort
competition. |
The
Government's response was to open a court action against
the EU in the hope that it might be able to retain the
current basis with no or only minor alterations. Said
Mr Caruana: 'The government is legally advised that
the Commission's decisions are wrong in law and have
been taken in breach of several applicable procedural
rules and legal principles. It is essential to leave
no stone unturned in challenging these decisions, given
their severe consequences for our economy, for the jobs
of many hundreds of Gibraltarians and for government
revenue and therefore for our collective standard of
living as a community. The government remains completely
committed to the Finance Centre and to ensure its continuing
and competitive prosperity and is in close consultation
with the Finance Centre Council on this matter.'
While
the Government awaits the outcome of its action against
the EU, it continues to work intensively with local
businesses and professionals to craft a workable new
regime that will both satisfy the EU and be attractive
to international companies. A team of private sector
specialist lawyers has been appointed to formulate new
legislation to replace the existing laws governing exempt
and qualifying companies. After meetings with representatives
of the business sector in mid-October, the Government
said it expected to be able to announce the outlines
of a new regime within weeks.
Sources
close to the negotiation say that among the possibilities
being canvassed for raising additional revenue to replace
lost tax is the levying of a fee on public utilities
such as water, telephone and electricity suppliers.
This fee would not be a direct tax, but an amount based
on the proportion of revenue being collected. This,
although seen as a way of creating an exemption, would
not be considered as a tax and would be able to bypass
the EU's threats on State Aid. Another possibility would
be a 'payroll tax' as levied in other territories such
as Bermuda. This would see local companies having to
pay some form of indirect taxation, but would not affect
offshore companies who do not employ personnel in Gibraltar,
thus bypassing the tax exemptions threat and maintaining
the zero offshore status.
While
Gibraltar struggles to conform to the requirements of
the EU and the OECD, the fashionable demonisation of
offshore jurisdictions in general and Gibraltar in particular
was graphically illustrated by an intemperate and inaccurate
French parliamentary report issued early in October.
The
French parliamentary committee on financial crime unveiled
a 400-page report condemning Britain's attitude towards
money laundering, suggesting a tightening up of regulations
on London City-based financial services, and demanding
the dismantling of offshore tax havens such as the Isle
of Man, Jersey, Guernsey and Gibraltar.
The report, which follows similar diatribes against
Switzerland and Monaco, was a year in the making, and
criticises the UK's banks for being too secretive, political
leaders for being too forgiving, and the authorities
for not having enough resources. It argues that now
Britain had pledged to join forces around the world
to freeze the funding activities of terrorists, it was
more urgent than ever to strengthen its anti-money laundering
rules.
The
report stated: 'The City, stronghold of world finance,
continues to largely ignore its duties in the domain
of money laundering ... [it is] an impenetrable fortress
with a status, rights and customs of its own, a closed
universe where every financier, banker or businessman
chooses silence above all else. Great Britain must also
dismantle the legal and banking havens of the crown
dependencies and the 'overseas' territories for which
it has a particular responsibility .. It is high time
that Europe got worried about sheltering in its midst
these veritable machines that launder criminal money
[these tax havens had] at least the tacit if not explicit
backing of the United Kingdom.'
The
report was emphatically rejected by the UK and Gibraltar
auhorities, who called it 'incompatible with reality'.
In fact, the Deputies responsible for the report need
not be taken too seriously - although not exactly disowned
by the French Government, they are regarded as harmless,
rather along the lines of the infamous UK 'Beast of
Bolsover', Dennis Skinner, who gets a lot of newspaper
coverage for his outrageous comments but will never
have office.
The
Gibraltar Government said about the report: "The
comments about Gibraltar in the report rely on Spanish
judicial sources and reflect the usual Spanish line
on our finance centre. The French MPs visited Madrid
en route to Gibraltar before compiling their report
and had clearly been negatively briefed about Gibraltar
whilst in Spain. Furthermore, the comments about Gibraltar
in this report are wholly incompatible with reality
and with the full endorsements of Gibraltar's co-operative
status and highest financial regulatory standards by
credible international bodies over the past year.
"Indeed the Report cannot possibly represent the
French Government’s view on Gibraltar given that
one of those international bodies that praised Gibraltar’s
standards in June 2000, the Financial Action Task Force
(set up by G7 nations) was chaired by a French Government
official.
"The
French MPs appear simply to have embarked on a general
campaign against finance centres based on prejudices
and preconceptions that they have been unwilling to
discard even when faced with the facts. Indeed, when
they visited Gibraltar in May 2000 the group of French
MPs publicly made very positive statements about the
Gibraltar finance centre and its standards.
"Both
the UK Treasury and City of London regulators have strongly
attacked the motives, seriousness, veracity and credibility
of this report. The Gibraltar Government shares that
assessment."
Spanish
complicity in the French report is only too likely:
the Spanish lose no opportunity to pursue their anti-Gibraltarian
agenda in Paris, as they showed in July when the OECD's
attempt to re-publish its list of countries offering
'unfair tax competition' was stymied by Spain's insistence
that the document should incorporate a reference to
Spain's rights over Gibraltar.
| Gibraltar
would indeed be on the revised blacklist, since
it has not yet given the 'commitment' which entitles
a country to be removed from the list. A recent
article in the Gibraltar press alleging that the
OECD was discussing the position of Gibraltar after
it 'delayed signing (a commitment letter) in July'
was strongly denied by the Government, which pointed
out that in June the OECD decided to extend the
deadline to November to allow tax havens more time
to sign (an excuse to cover up the real reason,
which was Spain's intransigence). 'It is not true
that Gibraltar has delayed signing anything,' the
Government said, 'Indeed, the Government now understands
that the deadline may soon be further extended.
Only one territory has given the commitment since
July.' |
 |
The
Government's statement confirmed that the policy and
intention of the government as to the giving of the
commitment remains the same, namely, that Government
envisages giving the commitment, before the deadline,
on the understanding that there has to be a genuine
global level playing field.
The
statement also criticised Spain for preventing the OECD
from publishing its July update report on tax havens
unless its position in relation to the sovereignty of
Gibraltar is protected. In addition, says the government:
'Spain is now apparently objecting to OECD officials
even continuing to meet directly with Gibraltar Government
officials. Such meetings have been taking place with
Gibraltar during the last two years - as with all other
territories listed as tax havens. The Gibraltar Government
remains happy to continue to meet with the OECD as before
and has requested such further meetings.'
The
government concludes that it 'deeply regrets the publication
of false information which appears to confuse Gibraltar's
position on the issue of giving the required commitment
on tax to the OECD (which position remains unchanged
and positive) with Spain's last minute sabotage of the
whole OECD project by its usual trick of playing its
"Gibraltar card" at the last minute when it
generates maximum pressure on all other parties.'
The Spanish Problem
Spanish
interference with the OECD process is of course relatively
minor compared to the threat to the Rock's independence,
which has recently taken on even greater dimensions
as it appears that the Foreign and Commonwealth Office
(FCO) under Jack Straw is getting ready to sacrifice
Gibraltar on the altar of its European ambitions.
| A
visit to Gibraltar by Peter Hain, Minister for Europe,
crystallised growing fears that the UK's long-time
loyalty to the interests of Gibraltar was weakening.
Whilst in Gibraltar, Mr Hain made it clear that
rather than being receptive to the fears and views
of the people of Gibraltar, he and his government
were set on a path which would exclude Gibraltar
from influencing its own destiny in the continuing
'Brussels Process' - the British/Spanish talks over
Gibraltar's status which originated in 1984 and
were reanimated earlier this year in Stockholm during
the Swedish presidency. |
Peter Hain |
Minister
Hain´s patronising and threatening attitude whilst
in Gibraltar was badly received by the Gibraltarians.
His statement, among others, that the people of Gibraltar
"will either change or be left behind" was
clearly seen by the Gibraltarians as another attempt
by the British Government at watering down the right
of the people of Gibraltar to self determination.
The
uneasy fears of Gibraltarians turned to dread and anger
when, shortly after Peter Hain's departure it became
clear that at Spain's request Gibraltar had been excluded
from the European Single Sky Measures. Inclusion in
these measures was always perceived in Gibraltar as
fundamental to Gibraltar's undisputed inclusion in the
EU, which she joined with the United Kingdom in 1973
under Article 227 of the treaty of Rome "as a European
Territory for whose external affairs a Member State
is responsible". As a local newspaper said: 'As
a result of Gibraltar's exclusion from the said measures,
the Rock now finds itself in the absurd state of being
within the European Union, except for its airspace!'
Gibraltar's
exclusion from a beneficial EU regime rankles especially
because of the pressure applied over many years by the
FCO convince Gibraltar to pass EU legislation, some
of which has been clearly detrimental to Gibraltar,
particularly to the financial services sector of the
local economy. Indeed, Gibraltar has dutifully adopted
a mass of EU legislation - now the FCO has 'fled at
the first whiff of grapeshot' as a famous Englishman
once said about the Spanish, and has capitulated in
the face of Spanish pressure to exclude Gibraltar from
EU measures potentially beneficial to Gibraltar´s
economy.
As
seen from Gibraltar, it is totally unacceptable for
the FCO, which has overall responsibility for Gibraltar´s
external welfare, to be openly in collusion with Spain
and effectively embarking on a path of open collision
with Gibraltar by failing to resist Spain´s clear
economic war of attrition against the territory.
Dr Joseph Garcia |
Opposition
leader Dr Joseph Garcia said that the Foreign Office
lacked courage in facing up to Madrid, writing in
a British newspaper: 'Mr Straw and his minister
for Europe Peter Hain have been singularly ineffective
in standing up to the continuous and illegal harrassment
on the part of the Spanish government against the
30,000 British people of Gibraltar. To add insult
to injury, it has recently been announced that Gibraltar
airport is to be excluded from the Single European
Sky measures following political pressure from Madrid.
In June, the foreign Office maintained that Gibraltar
could not be systematically excluded from European
Union law, and just three months later we have been
left out.' |
Disaffection
with the UK took on palpable form on Thursday 4th October
when a large proportion of the population of Gibraltar
took part in a demonstration against Britain's abandonment
of its Rock. With bi-partisan support (a very unusual
thing in Gibraltar's usually highly divisive politics),
the demonstration attracted the largest crowd ever seen
in one place in Gibraltar. Government and opposition
members of parliament a ringing Declaration of Unity:
We, the undersigned, being all the elected Members
of the House of Assembly of Gibraltar, declare and
endorse the following propositions, which unite and
reflect the views of the overwhelming majority of
the people of Gibraltar,
1.
The people of Gibraltar will never, ever, compromise
or give up our inalienable right to self-determination,
that is, the right to decide our future in our land.
2.
The people of Gibraltar will never compromise or give
up our sovereignty, not for good relations with anybody
and not for economic benefits either.
3.
The people of Gibraltar will not compromise our right
to self-determination, still less sovereignty, in
exchange for respect for rights which are ours anyway,
and which others should be made to respect unconditionally.
AND
WE
a.
CALL UPON Her Majesty's Government to honour, respect
and uphold our EU rights by ensuring that we participate
in all EC and EU measures in the same manner and to
the same extent as all other citizens and territories
of the European Union
AND
WE CONDEMN Her Majesty's Government in the United
Kingdom for capitulating under pressure to the suspension
of Gibraltar from the EU Single Skies measures, and
the Government of the Kingdom of Spain for demanding
it.
b.
REAFFIRM that Gibraltar wants good, neighbourly, European
relations with Spain based on reasonable dialogue
and mutual respect. Spain is obliged to respect our
EU and other rights.
c.
ASSERT that Gibraltar belongs to the people of Gibraltar
and is neither Spain's to claim, nor Britain's to
give away.
The declaration was handed to a representative of the
Foreign Office for delivery to Prime Minister Blair.
Copies of the declaration were also sent to the Secretary
General of the United Nations, the European Parliament
and the Spanish Prime Minister.
The
intense anti-UK feelings being generated among the Gibraltar
population were also expressed when the Governor was
asked not to accept his regular invitation to attend
the annual dinner of the Mediterranean rowing Club,
of which he is the patron. The Queen's representative
accepted the advice. Then Chief Minister Peter Caruana,
in a clear demonstration that he has moved away from
his long-time co-operative attitude towards the British
government, cancelled his attendance at the regular
annual meeting of British overseas territories in London.
Other territories had placed a motion on the agenda
asking Britain to uphold the European Union rights of
Gibraltar, as well as describing the Spanish claim to
Gibraltar as "anachronistic". The motion noted
the responsibility of the UK to conduct the external
affairs of the overseas territories in the interests
of the people of the territories and also noted the
UK decision to exclude Gibraltar from the European Single
Sky measures.
Mr
Caruana expressed his gratitude and appreciation to
the governments of the other UK overseas territories
"for this demonstration of solidarity with, and
support for, the simple democratic aspirations and rights
of the people of Gibraltar."
Peter
Hain's statement during his visit that the territory's
right to self-determination might be subject to the
300-year old Treaty of Utrecht, finally pushed the Government
(which has been denying the Opposition's urging on the
subject for years) to set about obtaining a legal opinion
on the matter. Chief Minister Peter Caruana said shortly
after the demonstration that the Government has obtained
"a very, very positive" draft legal opinion
from an international jurist on the issue.
Josep Pique |
The
nub of the Spanish problem for Gibraltar is the
question of the Brussels Process meetings. Should
they be bilateral, with Gibraltar 'in attendance'
(anathema to Gibraltar) or should they be trilateral?
At the time of Peter Hain's visit to Gibraltar he
also met his Spanish counterpart Ramon de Miguel
to discuss preparations for the next round of talks
under the process, which are expected before the
end of the year, and to the Gibraltarians' displeasure
the Spanish Foreign Ministry once again called upon
Mr Caruana to take part in the bilateral dialogue
between Foreign Ministers Jack Straw and Josep Pique. |
The
FCO is of course only an instrument in the affair -
its natural preference is never to do anything to upset
anyone. The real impetus to re-start the Brussels Process
has come from Tony Blair, who has instructed new boy
Jack Straw to resolve the 300-year dispute which is
increasingly the cause of disruption for European Union
business and Tony's europhile agenda.
When
talks do re-start, they will have on the table what
are known as the Matutes proposals, made in 1997, which
embody a period of joint sovereignty over Gibraltar
between Britain and Spain for at least 50 years, followed
by autonomy within Spain. The UK has never until now
accepted these proposals as a basis for discussion,
but the fear in Gibraltar is that in its new un-coperative
mood, the FCO may be capable of any kind of treachery
towards Gibraltar.
Gibraltar's
Chief Minister Peter Caruana said earlier in the year:
"as far as I am concerned the Matutes proposals
have been buried and disposed of in a manner that is
entirely effective and satisfactory for Gibraltar. It
is not credible to argue otherwise." Would he say
the same now?
Offshore E-Commerce & Telecommunications
Gibraltar's
physical and fiscal advantages as a low-tax entrepot
that is both inside and at the same time outside the
EU can be witnessed in its highly successful port and
the supporting commercial activities that surround it
- less visible but also an ongoing source of economic
benefit is the growth of e-commerce in Gibraltar.
The Government has demonstrated a clear commitment to
making Gibraltar an international e-business centre
and firmly believes that Gibraltar is in a position
to benefit greatly from developing as an information
society. Evidence of early success in this direction
can be found in the mushrooming growth of offshore betting
and gaming that took place in Gibraltar as UK bookmakers
used the possibilities of the internet to flee their
harsh domestic taxation regime. Gibraltar is not the
only offshore jurisdiction to have benefited from the
explosive development of internet betting and gaming,
but it has been stimulated by what happened to create
the conditions for a wider implantation of e-business
into its economy.
An
important first step was to legislate for e-commerce,
and this the Government achieved with the enactment
of The Electronic Commerce Ordinance 2001on the 22nd
March this year. The legislation facilitates the use
of electronic means for transmitting and storing information
and affords legal recognition to transactions effected
electronically. It also provides a framework for the
accreditation of electronic signatures and determines
the activities and liability of service providers.
In
summary the The Electronic Commerce Ordinance 2001 provides
the following:
Part
1 - Information Society Services
This part contains important definitions that are
pivotal to the main body of the legislation. In particular
definitions are provided for "service provider",
"established service provider", "information
society services" and "intermediary service
provider".
Sections
in this part include, Interpretation, General requirements
for service providers, Commercial Communications,
Contracts concluded by electronic means, Information
in relation to and conclusion of electronic contract.
Approved codes of conduct and prescribed standards.
Part
2 - Issue of Accreditation Certificates for Electronic
Signatures.
Part 2 establishes the framework for the authorisation
and recognition of certification service providers.
Applications for authorisation are to be made to the
Minister for Trade, Industry and Telecommunications
in the manner prescribed in sections 12 & 13.
The recognition of overseas providers or classes or
classes of such providers is dealt with through notice
in the Gazette in the circumstances set out in section
14. Sub-section (2) provides the basis upon which
recognition is granted.
Section
15 outlines the legal effect of electronic signatures
supported by an accreditation certificate and Section
17 deals with the civil liability of approved certificate
providers.
Part
3 - Transactions effected by electronic means.
Section 19 -20 deals with the requirements to present
or retain originals and to produce documents. Section
21 outlines the conditions for retention of documents
etc, in electronic form.
Sections
22 & 23 make provision for various important issues
including the admissibility and evidential weight
of data messages in legal proceedings and matters
relevant to the concluding of contractual obligations
through electronic communication.
Part
4 - General
This part contains a number of general provisions.
Section 24 provides that in the prescribed circumstances
an offence committed by a body corporate may be attributed
to any director, manager, secretary or similar officer.
Section
25 introduces a general power for the making of any
necessary regulations by the Minister and section
26 extends the restrictions on service providers.
Another
key step to encourage the development of e-commerce
was to liberalise the telecommunications environment.
The Gibraltar Telecommunications Ordinance 2001 entered
into force on the 19th July 2001, heralding the arrival
of full liberalisation of the telecommunications industry
in Gibraltar. Telecom liberalisation is the cornerstone
of Europe's transition, lowering the price of communicating,
and encouraging innovation and investment in new services
and networks.
The Telecommunications Ordinance 2001 provides for the
assignment or conferring of functions on the Minister
for Trade, Industry and Telecommunications and to the
Gibraltar Regulatory Authority, which has been established
as a separate legal body. The previous laws relating
to the telecommunications sector were the Wireless Telegraphy
Ordinance and Part II of the Public Utility Undertakings
Ordinance, which have been repealed, and new provisions
for operators wishing to provide telecommunications
services and establish or operate of telecommunications
networks have been made.
The
effects of liberalisation will be felt as new players
come in to the market, quality improves and the prices
of many services fall in real terms. On-line services,
notably via the Internet, will see continued growth,
as companies compete with each other to offer new service
packages and new pricing formulae.
At
European level, the rules that are currently applied
are set out in 7 liberalising measures and 14 harmonising
directives and decisions, which have now been complemented
by a number of recommendations and guidelines. These
have been transposed into Gibraltar law by the Telecommunications
Ordinance 2000 and a set of Regulations which transpose
into Gibraltar law the following European directives:
(i)
Directive 90/387/EEC (on the establishment of the
internal market for telecommunications services through
the implementation of open network provision) as amended
by Directive 97/51/EC (for the purpose of adaptation
to a competitive environment in telecommunications).
(ii)
Directive 90/388/EEC (on competition in the markets
for telecommunications services) as amended by Directives
94/46/EC (on satellite communications), Directive
95/51/EC (abolishing restrictions on the use of cable
television networks for the provision of already liberalised
telecommunications services), Directive 96/2/EC (on
mobile and personal communications) and Directive
96/19/EC (implementing full competition in telecommunications
markets).
(iii)
Directive 92/44/EEC (on the application of open network
provision to leased lines).
(iv)
Directive 97/13/EC (on a common framework for general
authorisations and individual licences in the field
of telecommunications services).
(v)
Directive 97/33/EC (on interconnection in telecommunications
to ensure universal service and interoperability through
application of the principles of open network provision)
as amended by Directive 98/61/EC (on operator number
portability and carrier pre-selection).
(vi)
Directive 98/10/EC (on the application of open network
provision) to voice telephony and on universal service
for telecommunications in a competitive environment).
Darion Figueredo |
Darion
Figueredo, Communications & Technology Development
Officer, says that the Government views these
developments as fundamental for the growth and
development of an information society and sees
them as a major step for Gibraltar and the telecoms
industry in general. The adoption of EU directives
into local legislation will give Gibraltar a great
advantage over other jurisdictions competing for
the same market.
The
Government of Gibraltar, says Mr Figueredo, is
continually developing strategies to create an
environment for businesses to trade electronically,
speedily and securely, based on a framework of
telecommunications, infrastructure and legislation
to facilitate the growth of e-commerce. |
The
Minister for Trade, Industry and Telecommunications
has set up a think tank in the field of e-business to
develop the fundamental principles and elements of the
Government's e-business strategy and launched its long-term
vision of Gibraltar's opportunities in this field and
its three year strategy to achieve this fundamental
aim.
The
Government's philosophy is to facilitate the consolidation
of the e-business and telecommunications sectors by
providing legislative, fiscal, administrative, financial,
educational and promotional support to strengthen Gibraltar's
presence in the e-business world.
In
the period 2001 to 2004 the Government intends to take
broad measures to provide flexible, simple and clear
legislative frameworks that allow fair competition to
thrive and contribute to the attraction of business.
Fiscal structures will be developed to attract business
to Gibraltar. The importation of specialist skills in
the information technology field will be facilitated
and adjustments to import duty for information technology
equipment will be reviewed.
This
has been followed with the announcement of free importation
of personal and commercial computer hardware and software
until March 2002 . Companies may also deduct whole of
capital cost of IT investment in first year up to £50,000,
in addition to the existing first year £30,000
capital investment allowance. Other schemes will be
considered from time to time to encourage and facilitate
inward investment.
The
European Union Funding Objective 2 Programme will be
fully utilised to assist the private sector to maximise
its opportunities in e-business. A specific aim within
the Single Programming Document submitted for approval
to the European Commission is the facilitation of e-business
and telecommunications projects and funds have been
reserved to achieve this and to allow the expansion
of small and medium enterprises. Direct Government funding
will also be available for these start-ups.
It
is also imperative, says Mr Figueredo, to educate, create
awareness and provide training and retraining to provide
and enhance skills to the existing workforce and foster
job opportunities for the unemployed, school-leavers
and returning graduates.
Objective
3 European Union funds will be utilised to maximise
the opportunities within the private and public sectors
in IT. The Departments of Education and Trade, Industry
and Telecommunications will work closely to heighten
awareness of and increase opportunities at all educational
and training levels.
The
Government aims to develop the infrastructure to ensure
it can respond to technological, logistical and practical
demands from the domestic or commercial user. Other
areas will be developed to facilitate the transit and
distribution of physical goods from Gibraltar as a result
of the diversification of established or new businesses
into e-business.
In
parallel to the efforts to foster a better environment
for e-business in Gibraltar the Government aspires to
introduce greater e-thinking into the public sector
and to develop g-business possibilities.
A
g-Business on-line initiative is being developed to
ensure that as much of the Government's business with
consumers as possible is placed on-line on an interactive
and non interactive basis.
The
resources of the Government have been reviewed and a
specific Communications & Technology Development
Unit has been established to drive these initiatives.
The
Government believes that Gibraltar's unique combination
of factors such as sound professional expertise, high
standards of regulation, location, bilingual community,
fiscal advantages, access to decision makers and flexibility
are well suited to consolidate Gibraltar into an attractive
international
e-business centre.
Gibraltar
showed how it means to be pro-active in generating e-business
when in August 2001 it offered itself up as a location
for the currently UK based Freeserve on hearing of the
ISP's VAT tussle with America Online. Freeserve had
claimed that AOL was enjoying an estimated £26
million tax advantage over its peers, as due to a loophole
in UK taxation law, it is not obliged to charge VAT
to its British customers.
Darion
Figueredo, who wrote the letter to Freeserve's CEO,
John Pluthero, said that although Gibraltar recognised
that it was too small to serve as the location for the
main operations of any of the major telecommunications
players, it hopes to attract smaller parts of the leading
multinationals.
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