Isle of Man: International Tax and Business Guide 1999 - The Tax System - 15.Withholding Taxes

Income tax at the standard rate of 20% must be withheld from dividends and from interest arising from Manx sources paid by a Manx resident company to non-resident recipients. No tax is withheld from dividend and interest payments to Manx residents.

By concession, no tax need be withheld from:

• Dividends paid to non-residents by approved investment companies.
• Interest paid to non-residents by financial institutions such as banks, approved by the Treasury.

Although there is no formal requirement to deduct withholding tax from such items as royalties, management fees, and branch profits, the authorities can require the deduction of tax at a specified rate from certain payments to non-residents.

Income tax at the standard rate of 20% must be withheld from remuneration paid by a Manx resident company to non-resident directors, whether or not their duties are performed within the Island.

Employers in the Isle of Man must deduct income tax from the salaries, wages, and other remuneration paid to any of their employees whose income is subject to Manx income tax. This is known as the income tax instalment payments (ITIP) system. The tax so deducted must be paid to the Income Tax Division of the Treasury. Every employee subject to the ITIP system must submit an annual income tax return and will be assessed to tax each year on the income declared in that return, but the tax deducted under ITIP will be offset against the tax due on the assessment, and any excess deduction will be repaid.

The information given is not exhaustive and is based on conditions existing at 5 May 1999. Readers are advised to consult with professionals, such as independent accountants, legal counsel, and investment bankers, before taking any formal action. Deloitte & Touche would be pleased to discuss specific problems.