Isle of Mann - 'We must shed 'Tax Haven' tag

Dropping the 'tax haven' label is critical for the Isle of Man to maintain credibility in the international community, according to Malcolm Couch, the Island's tax assessor.
Mr Couch gave an update on the government's tax strategy to this year's Manx Compliance Conference. He predicted a growing division in offshore centres with some jurisdictions falling away due to a lack of regulation and a smaller number, including the Isle of Man, thriving as well-respected international financial centres.

He said: 'My vision is that going forward we really have to put into a hole in the back garden and bury, the phrase "tax haven". In a way, the word "offshore" is also a bit dangerous, we are an "international finance centre".

Offshore implies something different. As we evolve our tax centre and regulatory framework, we are as well and better regulated than any of the usual suspects.

'We will be trying hard to educate the Manx population and the international business community, that the Isle of Man is a fantastic jurisdiction for inward investment. A good tax model based within a well-regulated triple-A rated environment, so they can feel certain about their tax treatment and probity. Isle of Man Plc has to have its own prospectus, a portfolio of things that we use to sell the Island. My role as tax assessor will continue to be a unique selling point (USP) for the Island.'

He said the Isle of Man would be the first of the Crown Dependencies to implement a zero-10 tax policy next April, giving an advantage over the Channel Islands in terms of attracting new business. He added that the withholding tax, set to accompany the EU's savings tax directive, is not designed to gather more tax, but was simply a measure to smooth cashflow to the Treasury.

'We need to square a number of circles. We have to meet EU requirements, maintain benefits to offshore companies and have a dynamic tax code. It has all been worked out very carefully. The Isle of Man government is small, but it's incredibly well connected, working well together. It also works very well with business. In my opinion the aim of government is always to foster what we do to make it as easy as possible to do business and keep that within a well-regulated form which stands up to external scrutiny. We are on a cusp and all the signs are that our economy is set to take us somewhere special.'

He confirmed that the EU's savings directive was almost certain to be implemented on July 1 this year. He said that the Island was well ahead of certain European nations in its readiness to deal with the implications of the directive.

'The directive is a typical EU dog's breakfast-type document. Contributions have been made from many EU member states, most don't understand what a trust is. We are way ahead of most states. People say, if that is the case, should the Isle of Man stand up and say we don't think we have you have cut the pitch, marked the lines or put the nets in place properly. That has been discussed in government, but our Manx response is to watch carefully and see what happens.'

Mr Couch also confirmed that the government were committed to introducing an income tax cap to encourage high net worth individuals to relocate to the Island.

'The intention is to make it as simple as possible, income tax up to a cap and that's it. A simple cap on worldwide income meaning that high net worth individuals with complex structures can have it all managed here. The feedback has been positive in the press, I would say we will see something like this in the next year or so, at a level to be decided.'