18.01 TAX TREATY
The Isle of Man has only one double taxation treaty, that with the United Kingdom. This treaty is more limited in scope than the typical double taxation treaty based on the Organisation for Economic Co-operation and Development (OECD) model; its principal provisions are those covering industrial and commercial profits, shipping and air transport profits, personal service income, and relief for income subject to double taxation.
18.02 UNILATERAL RELIEF
Foreign income taxes directly charged on the foreign-source income of a Manx resident are allowed as a credit against the Manx income tax liability on that income. Credit is given for foreign tax charged at the top rate of Manx tax charged on the foreign income. No double taxation relief is allowed for foreign underlying taxes on the profits out of which dividends have been paid to Manx residents.
Double taxation relief for Manx residents with UK-source income, and for UK residents with Manx-source income, is based partly on the double tax treaty and partly on unilateral provisions in the tax law of each country, the detailed provisions of which are complex.
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.