On 19 December 2011, the EU's Economic and Financial Affairs
Council (ECOFIN) confirmed that the Island's 0/10 corporate tax
system is compliant with the EU Code of Conduct for Business
Taxation (Code of Conduct). The news comes following the announced
abolition of the attribution regime for individuals (ARI) to take
effect for accounting periods commencing after 6 April 2012.
The standard rate of corporate income tax therefore remains at
0%. A 10% rate of tax applies to income received by a company from
banking business or land and property situated in the Isle of
Man.
The Island is a member of the Organisation for Economic
Co-operation and Development ("OECD"). This enables
access for Isle of Man financial services products to markets where
OECD membership is a requirement. The Isle of Man has developed a
package of commitments to the OECD convention covering information
exchange, business transparency and tax regimes, and in 2009 the
Island was named on the OECD 'white list' of the top tier
of jurisdictions that have 'substantially implemented the
internationally agreed tax standard'. Further, the Final Report
of the Independent Review of British Offshore Financial Centres,
(the "Foot Report"), published in October 2009,
considered the role of the Crown Dependencies and overseas
territories in the UK economy. It praised the Island as a
well-regulated and co-operative jurisdiction with a sound and
diverse economy.
In response to both OECD and EU initiatives, over the last few
years the Island has developed its own innovative system of
taxation. In doing so, the Isle of Man is committed to compliance
with both the Code of Conduct and the EU Savings Directive.
The EU Savings Directive requires that information in respect of
interest paid by a bank or other financial institution should be
exchanged automatically with the tax authorities in the state of
residence of the individual. With effect from 1 July 2011, the
Island withdrew the option for EU residents holding accounts with
Isle of Man banks to pay withholding tax under transitional
provisions and instead moved to the system of automatic exchange.
This means that the account holder's home jurisdiction will
automatically be informed of the existence of their account and
interest credited to it.
In 2011, following a peer review assessment on behalf of the
OECD's Global Forum on Transparency and Exchange of Information
for Tax Purposes, it was confirmed that the Isle of Man's
sharing of tax information has been 'effective and
expeditious', further enhancing the Island's international
reputation as a responsible and well regulated jurisdiction.
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.
Specific Questions relating to this article should be addressed directly to the author.
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