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
"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".
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.
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