Isle of Man Begins Tax Reform Consultation

March 2, 2010 International Tax CooperationOffshore BankingOffshore TaxationTax HavensTaxation in EUTaxation in Isle of ManTaxation in UK

National Transport Leyland Atlantean PDR1 C57 MAN (86) Douglas, Isle of Man.The Government of Isle of Man, a self-governing British Crown dependency, has begun public consultation on the potential tax changes which could be implemented on the island nation.

As reported earlier, at the Budget reading held on February 16th, Allan Bell, Isle of Man Treasury Minister, stated that the jurisdiction would hold an investigation into possible changes to its current tax regime in order to address issues raised by previous discussions held with the EU and its member states, particularly the UK. The scope of the consultation includes ascertaining the nature of changes which could be implemented for the jurisdiction, and the optimality of the proposed options.

Throughout the consultation the Government is seeking options which will fulfill conditions of the current EU Codes of Conduct of Business Taxation, meeting the needs of established local businesses and allowing them to grow. At the same time, one of the Government’s main priorities is to increase the attractiveness of the jurisdiction for international businesses and investors.

The current consultation process, which continues until May 28th 2010, is the first step of the Isle of Man’s current tax regime review. Within the first half of 2010 the Government also intends to conduct an investigation into the tax regimes of EU member states, while exploring the rationale which will be applied by an EU expert group assessing the Isle of Man taxation legislations. Throughout the entire process, international firm Deloitte Touche Tohmatsu will be engaged in a consultancy capacity for the Isle of Man Government.

The Isle of Man is a small island nation located in the Irish Sea; being scant in natural resources it relies heavily on attracting international investment to maintain a buoyant economy. The jurisdiction’s tax system is considered to be an attractive corporate tax planning vehicle, and draws significant of numbers international investors. Although, in 1999 EU experts issued a report which deemed the Isle of Man’s treatment of international business companies, exempt insurance companies; and non-resident companies, international loan and banking business, and 75% tax exemption for fund management to be unaligned with the EU Code of Conduct for Business Taxation. Since that time the Isle of Man has held continued discussions with EU member states and the UK regarding harmonization of national tax legislation.

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