B. whereas tax fraud and evasion constitute an illegal activity involving the evasion of tax liabilities, while tax avoidance is the legal utilisation of the tax regime to reduce or avoid tax liabilities, sometimes leading to aggressive tax planning, which consists in taking improper advantage of a tax system’s technicalities, or of mismatches between two or more tax systems, for the purpose of reducing tax liability;

D. whereas tax fraud and tax evasion constitute an illegal activity of evading tax liabilities, while, on the other hand, tax avoidance is the legal but improper utilisation of the tax regime to reduce or avoid tax liabilities, and aggressive tax planning consists in taking advantage of the technicalities of a tax system, or of mismatches between two or more tax systems, for the purpose of reducing tax liability;

D. whereas tax fraud and tax evasion constitute an illegal activity of evading tax liabilities, while, on the other hand, tax avoidance is the legal but improper utilisation of the tax regime to reduce or avoid tax liabilities, and aggressive tax planning consists in taking advantage of the technicalities of a tax system, or of mismatches between two or more tax systems, for the purpose of reducing tax liability;

The Commission found that three aspects of the tax reform were materially selective: (1) the requirement that a company must make a profit before it becomes liable to payroll tax and BPOT, since that requirement would favour companies which make no profit; (2) the cap limiting liability to payroll tax and BPOT to 15% of profits, since that cap would favour companies which, for the tax year in question, have profits that are low in relation to their number of employees and their occupation of business property; and (3) the payroll tax and BPOT, since those two taxes would inherently favour offshore companies which have no real physical ...[+++]presence in Gibraltar and which as a consequence do not incur corporate tax.

That reform included in particular the repeal of the former tax system and the imposition of three taxes applicable to all Gibraltar companies, namely a companies registration fee, a payroll tax and a business property occupation tax (‘BPOT’), with a cap on liability to payroll tax and BPOT of 15% of profits.

In August 2002, the United Kingdom notified the European Commission of Gibraltar’s proposed reform of corporate tax , That reform included in particular the repeal of the former tax system and the imposition of three taxes applicable to all Gibraltar companies, namely a registration fee, a payroll tax and a business property occupation tax, with a cap on liability to payroll tax and business property occupation tax of 15% of profits.