ANY QUOTES USED MUST BE ATTRIBUTED TO JEFF RANDALL LIVE, SKY NEWS

DHARSHINI DAVID: Tensions between Britain and Spain over the ownership of Gibraltar can be traced back to the 1713 Treaty of Utrecht. Well in recent months the two countries have been embroiled in a deepening row over territorial waters around the Rock. Today though, dignitaries are gathered here in London to celebrate the UK’s relationship with Gibraltar. Meanwhile over in Brussels an in-depth investigation into Gibraltar’s corporation tax regime was launched last week by the European Commission following a complaint from Spain. The investigation is to determine whether a corporate tax scheme introduced two years ago breaches EU rules by favouring certain types of company. In particular the Commission will examine passive interest income from dividends interest on royalties that are no longer taxed in Gibraltar irrespective of where the source of income.is located. Joining me now is Gibraltar’s Minister for Financial Services, Albert Isola, it’s great to have you here with us. First of all, the EU investigation, this was brought by Spain of course, how serious is this for Gibraltar?

ALBERT ISOLA: Well we need to put it into context. In 2010 as you mentioned the Gibraltar parliament passed our new Income Tax Act. That was the last phase in the transition from offshore to onshore which many of the jurisdictions have also done similarly. Since that time, and for the whole period of the three years, we have been basically transposing all EU Directives, not just in financial services but across the board and we are probably one of the few jurisdictions that are fully up to date. Our regulatory system has been reviewed, the OECD has had a look at our systems, the FETF, the IMF and they all speak very highly of the standards that we’ve set and the way that our structures are set up. More recently, just a few months ago, the Code of Conduct Group in ECOFIN and ECOFIN itself voted 26 to 1 that Gibraltar’s income tax – the very subject that is now under investigation – was entirely compliant with EU legislation. So Gibraltar for all this period of time has been getting itself in order, transposing all directives, embracing the UK government, Prime Minister Cameron’s pride of the G8 in Northern Ireland, initiative on tax transparency and the effective exchange of information. We already exchange information with many countries, we have signed 26 tier agreements and there is another one being signed tomorrow with Guernsey. Against that backdrop you have the investigation by the European Union. It’s on two very small items of our income tax legislation, one of which we’ve already dealt with on the interest and the Royalties were very confident that we would be able to deal with the remainder of it within a very short period of time, and I mean a short period of time. So we’re confident that this is not a problem, it’s not a setback, it’s limited to that part which in effect if you want to reverse it means that the remainder of the legislation is good for what it is and we’re very confident that we’ll be able to satisfy the European Commission that the complaint is not justified.

DD: Yes, Spain brought this complaint of course, they seem to be very happy it’s being looked into but you’re confident that frankly there’s nothing there at all that’s going to actually …

AI: And if there is it can be dealt with, as it has in the past with the issue of interest treatment, we’ve dealt with that, we’ve legislated for that so we’re not particularly concerned, we’re not surprised but we’re not particularly concerned.

DD: Let’s move on to a different area. Of course you are the Minister for Financial Services and that is an area which has been quietly very successful in Gibraltar, the scale of which would actually surprise many people.

AI: Well Gibraltar always had a slowly sustainable growth. It will surprise many people that our economy during the past five years during the world economic crisis continued to grow. This last year we posted a 7.8 GDP growth, we are always in surplus, our debt is reducing so the general requirement is a positive and strong robust economy. Financial services have played its part in that, continued growth and continuing employment levels within the entire sector and at the end of the day when we come to London today to celebrate Gibraltar Day which is the nearest we get to Trafalgar Day, we find that we’ve hosted today a trade breakfast in the morning, a financial services lunch, we have a new gaming function tomorrow and this evening as we speak there is a function at the Guildhall for over a thousand people with a more political content. We are very proud of the support that we have in the UK, not just from the politicians which is crucially important for us, but of course from the people and today we have an event at the Guildhall which was oversubscribed, we had over 350 people at the function, at the event and we’re looking to see what we do next because we have a waiting list of 60. So that relationship with the City of London who obviously are very familiar with Gibraltar’s financial services, we have the same legal system, we understand each other, it continue to grow to everyone’s delight and may it continue to work.

DD: All that and you’ve given up being at that evening function to be here with us at Sky News.

AI: It’s been my absolute pleasure.

DD: Alberto Isola, it’s been great to have you here with us, thank you very much for joining us.