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One of the biggest developments in Gibraltar in the last few years was the introduction in 2010 of the new Income Tax act. The main feature of this was a reduction of corporate tax from 22% to 10%....

One of the biggest developments in Gibraltar in the last few years was the introduction in 2010 of the new Income Tax act. The main feature of this was a reduction of corporate tax from 22% to 10%. As well as providing further incentives for corporates looking at re-domiciling options, the new act also represents the jurisdiction's attempt to move forward from its reputation as an 'offshore centre' to a more rounded economic base.

Nevertheless, the country's main economic drivers remain the investment funds and betting and gaming industries.

Like similar jurisdictions such as the Channel Islands or Luxembourg, Gibraltar has been affected by the Alternative investment Fund Managers Directive (AIFM). The new requirements will apply stricter rules to offshore funds marketing within the EU. Certainly for a period during the drafting and consultation period there was concern over how jurisdictions like Gibraltar would be viewed. However, though there are certainly still amendments to be made, the final draft of the legislation has turned out to be more favourable than some had hoped, with Gibraltar and other jurisdictions like it acting as a bridge between the EU and the traditional offshore centres. Practitioners will also be hoping that this leads to a re-domiciling of funds from centres like BVI and the Cayman Islands with managers seeking out a more regulated environment in the wake of more rigorous enforcement worldwide in the wake of the financial crisis.

Related to this, there is also hope that there will be further growth in mandates relating to Ucits (Undertaking for Collective Investments in Transferable Securities) in the wake of the new AIFM rules as has been seen in Ireland and Luxembourg. With the directive allowing such funds to be 'passported' into the EU, growth potential among investors remains vast.

The gaming industry is still a prime source of work with many key global brands such as William Hill, Betfair and Ladbrokes operating out of the country. Practitioners will also be hoping for further increases as the current online gaming boom continues.