Gibraltar tax haven.
PROTRACTED negotiations between the European Commission, Britain and Gibraltar will lead to the UK colony scrapping its Exempt Company tax regime, deemed by Brussels a harmful tax haven. The Commission has formally requested that the system is scrapped by 2010. Britain is expected to accept its terms, given they resulted from tripartite talks. If it does not, Brussels will open a state aid inquiry that would probably lead to a legal order for abolition. For his part, Gibraltar Minister Peter Caruana welcomed the six-year phase out terms, which will affect 8,500 companies. He said the talks had been "extremely difficult" and said the result had been "reasonably good". An Exempt Company pays a fixed annual tax of between Pounds 225 and 300, being exempt from any further taxation. It may not conduct any trade or business within Gibraltar and Gibraltarian or Gibraltar residents cannot have beneficial interests in their shares.