Isle of Man: Domestic Corporate Taxion
The Future of the 0/10 Regime
In February 2010, the Isle of Man Income Tax Department launched a consultation on the future of business taxation on the island following scrutiny of its 0/10% regime from the European Union (EU) Code of Conduct For Business Taxation Group.
The Isle of Man’s decision to amend its business tax regime was first announced on October 20, 2009, by the Isle of Man Chief Minister, Tony Brown, in a statement to the island's parliament, the Tynwald, in response to changes to the Customs & Excise Agreement revenue sharing arrangements between the Isle of Man and the United Kingdom (UK) and other international developments.
As part of his statement, the Chief Minister said:
“We have been watching the way international sentiments and standards have been moving in response to the global economic crisis, and especially the speed with which such matters have been changing and the potential effect they may have on our economy."
“[Revisiting our business tax regime] will allow us to develop and position the island and its future tax regime, so the island can continue to remain competitive and at the same time be accepted by the international community as responsible and co-operative.”
“The government will also be actively looking to identify what new opportunities can be taken to secure further business within the Island with a view to continuing to diversify our economy and increasing our income.”
In December 2010, the Manx government's review of the 0/10% regime was effectively put on ice until a High Level Working Party established by the European Union to review the Code of Conduct for Business Taxation had reported back to the European Council of Finance Ministers (Ecofin). The Working Party was not expected to report its findings to Ecofin until June 2011.
However, it was announced in the February 2011 budget speech that the 0/10% regime would remain in place and the attribution regime for individuals (ARI) be removed from April 2012.
Treasury Minister, Anne Craine MHK, said in her speech: "the Isle of Man Government considers that with the removal of the ARI, our business taxation system does not have features which can be considered to be harmful under the provisions of the Code of Conduct, and we have today communicated that view to the Chair of the Code Group." She added: "We remain committed to our policy of being a good neighbour, which encompasses being responsive to the views of the European Union. At the same time, the Isle of Man is fiscally independent, and participates in the Code of Conduct process on a voluntary basis."