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.
Please click here to access the Government press release (http://www.gov.im/lib/news/cso/euconfirmsisleof.xml).
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