Gibraltar Government Corrects Transaction Tax Misinformation

Gibraltar Government Press Releases

Published March 23rd, 2026

Detected March 24th, 2026

Summary

The Gibraltar Government issued a notice to correct misinformation regarding its new transaction tax. The notice clarifies that the tax is levied on the cost price of goods upon importation, not the retail sales price, and will not result in a 15% price increase for consumers. The government aims to prevent profiteering and ensure compliance with EU customs union requirements.

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What changed

The Gibraltar Government has issued a press release to correct widespread misinformation concerning the implementation of a new transaction tax. The notice explicitly states that the tax is levied on the cost price of goods upon importation, not the retail sales price, and will not directly cause a 15% increase in product prices as suggested by some commercial establishments. This clarification is crucial as it aims to prevent consumer fraud and profiteering, ensuring that businesses do not falsely attribute price hikes to the new tax.

This action is part of Gibraltar's move towards an EU Customs Union, requiring a new tax structure to replace import duties. The transaction tax will be phased in at rates starting at 15% and rising to 17% over three years, with reduced and zero rates for certain goods like food. The government will monitor market conditions and may impose controls to prevent profiteering. Businesses and consumers should be aware that the tax applies only to goods, not services, and that any unjustified price increases will be considered profiteering.

What to do next

Review the official guidance on the new transaction tax to understand its application to imported goods.
Ensure pricing strategies do not reflect a 15% increase attributed to the transaction tax, to avoid accusations of profiteering.
Monitor market conditions and potential government controls related to the tax implementation.

Penalties

The government may impose controls to prevent profiteering, implying potential sanctions for non-compliance or exploitative pricing.

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+ Reset ## Government corrects transaction tax misinformation - 201/2026

March 23, 2026

The Government wishes to correct false information about the effect of the new transaction tax.

This misinformation has circulated despite the detailed explanations on the subject which have been made available to the general public and to the business community in particular.

The Government is aware that there are commercial establishments which have urged their customers to place orders or make purchases before 10 April in order to avoid a 15% increase in the price of the product.

This is incorrect and tantamount to consumer fraud.

The new tax will not lead to a 15% increase in the retail price of a product simply because it is levied on the cost price and not the sales price.

In other words, the transaction tax is not a Value Added Tax which is paid at the point of sale. Instead, it will be paid on importation of the goods based on the lower cost price to the business.

There can be no justification for a product which retails at £100 to then retail at £115 when new the transaction tax comes into force. If it did, that would constitute blatant profiteering of the worst possible kind.

It is worth recalling that in order to move into a goods and customs union with the EU Customs Union, Gibraltar will need to apply a new tax which will replace import duty. This will be set at the lowest rate in the European Union.

The standard tax will start at 15% in year one and then move to 16% in year 2, ending at 17% in year 3 which is currently the lowest in the EU.

There will also be a reduced rate of 5% on certain products and a super-reduced rate of 0% on others. Food and non-alcoholic drinks are zero rated.

The transaction tax will NOT apply to services only to goods.

The Government will monitor market conditions when the new tax is implemented and may impose controls in order to prevent profiteering.

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