Isle of Man: E-Commerce
What to Locate in the Isle of Man
To date, e-commerce companies have tended to focus on marketing and selling as the most likely business functions to locate offshore, but there is no reason why procurement, administration, payroll and other corporate functions should not be based offshore.
Since physical distribution can be outsourced, and in some countries doesn't even amount to a taxable presence, the use of offshore is by no means limited to digitally-downloadable products. Still, there is no doubt that the greatest cost and tax savings are available to those companies whose products can be delivered electronically, as in the following list:
Retail businesses dealing in intangibles or intellectual property, such as:
- Software or music
- Electronic publishing enterprises
- Online reservations
- Telecommunications services
- Language translation services
- Education and Internet-based training
- Online gift certificates
Online brokerages and other financial services, including:
- Legal services
- Software and other technical support
- Research and online information services
- Internet Service Providers (ISPs)
- Metamediaries and access portals
- Corporate services
Data warehouse centres for:
- Processing and storing data
- Database management services
- Certification and verification services for business and consumer documents
- Hubs for secure transactions and communications
- Supply chain management centres
- Communications and billing hubs for fibre optic and satellite systems
- Network monitoring facilities and services
The Isle of Man has targeted betting and gaming among other offshore e-commerce sectors, with some success. Purpose-built legislation was introduced in 2001 and a number of (quite expensive) licenses were issued to international gaming consortia. Problems with payment mechanisms in the light of US antipathy towards on-line gaming led to some closures in 2002, but by 2003 it appeared that the sector would become established on a long-term basis. Indeed, in January, 2004, Irish bookmaker Paddy Power announced that it intended to relocate its London-based telephone betting service to the Isle of Man, in order to take advantage of the more attractive tax regime.
The Isle of Man has been named on the UK government's e-gaming 'white list,' which allows e-gaming companies based in the Isle of Man to market their services in the UK under the UK's Gambling Act 2005 regime, which came into force in September, 2007.
In the case of the Isle of Man, its physical proximity to EU markets, its application of EU Value Added Tax, and its Ronaldsway freeport facilities mean that it can also be used as a trans-shipment or physical distribution centre for many types of product.