The news today (7 December 2012) that the Isle of Man will be
adopting tax information sharing arrangements with the United
Kingdom which will follow closely the FATCA intergovernmental
agreement currently being negotiated with the United States comes
as no surprise. It was widely anticipated following an apparent
HMRC leak a few weeks ago.
We set out below the statement of Chief Minister Allan Bell on this
announcement and the view of DQ's Tom Maher.
Isle of Man Chief Minister Allan Bell commented
today:-
"The nature of tax cooperation is changing and, as I made
clear in my Agenda for Change speech to Tynwald in October,
automatic exchange is becoming the global standard. The Island
already shares tax information automatically under the EU Savings
Directive and has recently announced that it will do so on a wider
basis with the USA. This decision is a well-considered next step in
the Island's long-established policy of commitment to being at
the forefront of tax transparency and international cooperation.
The Isle of Man has achieved global recognition for its proven
record of compliance with current international standards of tax
co-operation, with the OECD reporting to the G20 last year that the
Island was one of only a few jurisdictions with all the elements of
effective tax information exchange in place. At the same time the
Financial Stability Board placed the Isle of Man in the highest
category of co-operative jurisdictions strongly adhering to
international standards of co-operation and information exchange.
Continuing with this approach, it is logical for the Isle of Man to
embrace new forms of tax cooperation with our largest trading
partner, the UK."
Tom Maher head of DQ's corporate & commercial
department commented:-
"This UK FATCA style agreement is the next natural evolution
of a global exchange of information strategy which started over a
decade ago with organisations such as the OECD. In my view, the
Isle of Man will as always respond positively to international
standards as they develop, as is evidenced by the fact that we are
already in advance negotiations with the USA regarding
implementation of FATCA, we adopted automatic exchange of
information on EUSD back in July 2011 (even though the Island is
not a member of the EU) and have sophisticated and detailed anti
money laundering rules in place since the 1990s which are more
comprehensive than many onshore jurisdictions.
The Isle of Man committed with the OECD over 10 years ago to
develop principles on transparency and exchange of information in
tax matters and has since taken the lead among the world's
international financial centres in implementing these principles.
The Isle of Man was part of the original drafting group within the
OECD in 2001 that prepared the model tax information exchange
agreement (TIEA) which has since been adopted as the gold standard
internationally. The Isle of Man was one of the first countries in
the world to sign a TIEA with the USA back in 2002 and has had
effective exchange of information with the UK for over 50 years
following the 1955 double tax agreement. This new FATCA style
agreement with the UK is just an evolution of that process.
However, we need to ensure that the implementation of this latest
agreement is carried out in an effective but pragmatic and sensible
way which does not make business grind to a halt under a heavy
weight of red tape."
The Chief Minister further commented:
"As a small International Business Centre, the Isle of Man
seeks to work in partnership with our key economic allies to
compete for global business. It is therefore essential that we also
work together to achieve international standards of regulation. By
clarifying our intentions, we can give business confidence about
our direction of travel, so that together we can build a
sustainable future for the Island's economy. We will be working
closely with our Isle of Man based businesses and the UK Government
to ensure measured and cost-effective implementation of this
agreement. I look forward to announcing further details of how we
are achieving this over the coming weeks."
DQ's overview of the Isle of Man as a co-operative
jurisdiction
The Isle of Man has been at the forefront of international
cooperation on tax and insolvency matters for many years, both in
terms of the approach taken by the Government and the judiciary.
The Isle of Man Government has now signed a total of 32 agreements
which meet OECD standards; 26 TIEAs and additionally 6 Double
Taxation Agreements, including agreements with 7 out of the
world's 10 major economies. More specifically, it has done so
with all of the top 5 global economies – US, China, Japan,
India and Germany.
The Isle of Man's Chief Justice His Honour Deemster Doyle has
made it very clear in his judgments that foreign courts and
criminal authorities will be "afforded the fullest help it is
possible to give" by the Isle of Man Court (US Securities
and Exchange Commission v Samuel E Wyly and others ORD
2012/24) and that "we are also citizens of the global
community in which we live, work and contribute. We need to
recognise our international as well as our local responsibilities.
If the English High Court requires assistance then the Manx High
Court, if it has jurisdiction and subject to any necessary
safeguards, it should not, in a proper case, be slow to provide
such assistance." (Impex Services Limited 2004)
DQ will continue to monitor developments and announcements from the
Chancellor, HMRC and the Isle of Man Government in the coming
weeks. However, nothing we have heard in the past few days is
unexpected, nor will it trouble a reputable, sophisticated and
co-operative jurisdiction like the Isle of Man. Let's just hope
that, as Chief Minister Bell said, there will be "a measured
and cost-effective implementation of this agreement".
DQ's Expertise
Dougherty Quinn (DQ) has a specialist team with
extensive experience of advising clients in relation to
international tax, securities and criminal investigations, TIEA
requests and multi-jurisdiction insolvencies in the Isle of Man and
the BVI.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
