Brussels, 30/03/2004 (Agence Europe) - The European Commission has closed an investigation begun on 16 October 2002 on the planned reform of Gibraltar's company taxation laws which is not in line with EU rules on State aid. The reform aimed at abolishing the current 35% corporate tax rate and replacing it with a payroll tax and a business property occupation tax - both capped at 15% of profit. In addition to the payroll and property taxes, financial services companies would be charged a top-up tax fixed at a rate between 4% and 6% of profits from their financial service activities. The total taxation of financial services companies (payroll + BPOT + top-up) would also be capped at 15% of profit. The Commission recognises the geographic isolation of Gibraltar and the disadvantages resulting from this but it believes that, companies registered in Gibraltar would benefit from a much lower tax rate than the corporate tax rate applicable in the United Kingdom. This will give companies registered in Gibraltar an unfair advantage because corporate tax in the United Kingdom is 30% of profit, whilst under the reform; the tax rate in Gibraltar would be lower. In addition, since the tax is based on payroll and occupation of business premises, offshore companies which have no physical presence in Gibraltar will not incur any tax liability at all.