Is the Isle of Man a “force for good”?
Yesterday yet another offshore investment location sought to cast itself in the role of the friend rather than the foe of international tax authorities.
In a speech entitled “Re-invention of Offshore Centres,” the Isle of Man’s Treasury Minister Anne Craine explained why she thought that the public perception of her country needed to be changed to that of a clean arena for honest business dealings rather than a tax haven.
The Minister was making her speech at Dublin’s 2010 Global Financial Services Centres Conference but the message was for a much wider audience.
Just because her country was a small island, claimed Craine, it does not mean that it is a haven for international tax evaders. In fact, Craine highlighted the positive contributions that the Isle of Man makes to the global economy. Citing the International Monetary Fund’s report of 2009 and Michael Foot’s report on Crown Dependencies and Overseas Territories, Craine held that her views were well supported by internationally acclaimed organisations.
Ms Craine said that despite recent measures the Isle of Man government has taken to improve tax exchange with other countries, its financial community has not experienced a downturn in the amount of business it has been doing.
This is no surprise – after all Tax Information Exchange Agreements have swept across the developed world and are becoming the norm rather than the exception. So an increase in the number that the Isle of Man is signing is not likely to affect business there.
However, what remains to be seen are the effects that the Isle of Man’s February Budget will have on the business it receives from offshore investment.
In particular, non-resident private individuals were dismayed to discover that their personal allowance for income tax from Manx investments will be withdrawn. Further, whilst the basic rate of tax stayed the same, the higher rate was increased from 18% to 20%. This is clearly a far cry from the crippling 50% that the highest earners have to pay in the United Kingdom, but investors in the Isle of Man must be watching with interest to see what comes next.