Isle of Man: Domestic Corporate Taxion
Corporate Tax Rates
The standard rate of corporate income tax in the Isle of Man is 0%. The 0% rate was introduced on April 6, 2006 and applies to the profits of accounts that form the basis of a company’s 2006/07 income tax assessments and any subsequent accounting periods.
Also with effect from April 6, 2006, a 10% rate of tax applies to income received by a company from any of the following sources:
- banking business;
- land and property in the Isle of Man (including property development, residential and commercial rental or property letting and mining & quarrying).
From April 6, 2013, the 10% rate of tax also applies to resident and non-resident corporate taxpayers who:
- carry on retail business in the Isle of Man and
- have a taxable profit exceeding the 'small company limit' of GBP500,000
The above was published in a practice note issued on March 22, 2013.
All resident companies pay an annual return fee of GBP360. Previously a company was subject to an annual charge, from April 6, 2006, of GBP250. For 2007/08 the Corporate charge was set at GBP250 per company but was then collected as part of an increased Company Annual Return fee (GBP360 at the time of writing), set by the Financial Supervision Commission, reducing bureaucracy for companies. In the 2009 budget, the Treasury revoked the Corporate Charge Deduction for corporate tax payers who pay tax at rate of 10%. The Order applies from April 6, 2009 for all accounting periods ending on or after April 6, 2009.
Companies qualifying for the 0% corporate tax were, until April 2012 able to elect to pay tax at 10% in order to avoid being subject to the Attribution Regime for Individuals (ARI) which applied to companies from accounting periods of April 6, 2008 onwards. The ARI applied to all resident individuals with an interest in a relevant company.
Resident individuals with an interest in a relevant company are charged to income tax on their share of the attributed profits from that company. This in essence removed the corporate veil for income tax purposes as individuals are taxed directly as if they had received the income attributable to their share of the annual profits of a relevant company. This is known as the attributed income.
In expectation of ARI being declared harmful under the European Code of Conduct for Business Taxation, it was announced in the 2011 budget that ARI would be abolished from April 2012. This move enables the 0/10% tax regime to remain intact.