The
agreement specifically excludes dividends
and debenture interest from its provisions.
Exempt
companies, International
Companies and International Limited Partnerships
are not entitled to the benefits of the
treaty.
The
Isle of Man and the Netherlands broke
new ground in October, 2005, as representatives
from both governments signed a bilateral
economic cooperation treaty, the first
of its kind between a small international
financial centre and an OECD member.
The
agreements are part of a Manx/Dutch economic
deal – the first of its kind between a
small international business centre and
an OECD member – aimed at supporting business
opportunities between the two countries.
They
were signed in the Manx capital, Douglas,
on 12 October 2005 by Mr Bell and the
Deputy Finance Minister of the Netherlands,
Joop Wijn. The agreements were ratified
by the Isle of Man's parliament, the Tynwald,
at its May 2006 sitting, and on 21 July
2006, the Isle of Man Government received
confirmation that the Netherlands had
also ratified the agreements. In accordance
with the wording of the agreements, they
came into force following receipt of the
notification from the Netherlands.
According
to the Manx government, the deal with
the Netherlands is seen as confirming
the economic recognition of the Isle of
Man by an important European state. It
also opens up international business opportunities
and paves the way for similar agreements
with other countries.
“Normal
relations between countries are based
on respect, understanding and appropriate
agreements. Fiscal agreements, in particular,
foster bilateral trade and investor confidence
in both countries. The Isle of Man has
negotiated skillfully a good package with
the Netherlands and has never ignored
its international obligations during those
negotiations," observed Bell.
“We
have come out of this as friends of the
Netherlands and look forward to working
closely with them going forward. We invite
other countries that we are also in negotiation
with now to finalise agreements with the
Isle of Man underpinned by mutual benefits,
respect and understanding as they would
with any other well-regulated member of
the international economic community,"
he added.
The
agreement has been endorsed by the OECD.
Included
within the framework of the agreement
are:
- A
shipping and aircraft taxation agreement
ensuring that a relevant business based
in the Isle of Man will not be taxed
in the Netherlands so long as it is
conducting international trade;
- A
‘transfer pricing’ agreement, meaning
that the Isle of Man and the Netherlands
will work together to ensure certainty
of treatment when companies having operations
in the two territories move goods and
services between them;
- An
agreement that Manx subsidiaries of
Dutch companies will not experience
any tax issues now that the Isle of
Man has introduced its ‘0/10’ company
tax system;
- A
commitment to work towards a full double
taxation agreement between the Isle
of Man and the Netherlands which will
further support Manx-Dutch business
relationships; and
- A
tax information exchange agreement.
In
December, 2005, Australia's Deputy Commissioner
of Taxation, Paul Duffus informed the
Senate Economics Legislative Committee
that the Australian Tax Office (ATO) had
been conducting talks with the Isle of
Man and other 'low-tax' jurisdictions
with a view to completing tax information
exchange agreements.
Isle
of Man Other International Agreements
In October, 2002, the Isle of Man’s
Treasury Minister, Allan Bell, signed
a bilateral agreement with the United
States of America which provides for the
exchange of information on tax matters
between the two countries. The agreement
provides for exchange of information by
specific case request.
Allan
Bell said: “Today co-operation between
Governments is more important than ever
as we work to ensure that no safe haven
exists - either onshore or offshore -
for funds associated with activities such
as money laundering, terrorist financing
or tax evasion.
“Equally
the Isle of Man believes that the expansion
of the global economy depends on both
onshore and offshore international financial
centres combining highly competitive entrepreneurial
environments for business with a quality
of regulation and stability.”
The
Isle of Man sets out to be a well regulated
and responsible jurisdiction and is financially
strong, as evidenced by its Triple A rating
with Moody’s and Standard & Poors.
It has been recognized by the FATF as
being ‘at the forefront of international
efforts to prevent the abuse of company
structures for criminal purposes’.
Allan Bell continued: “The ability
to exchange information in relation to
criminal matters already exists between
our countries via the Department of Justice
in the United States and the Attorney
General in the Isle of Man.
“The
Island’s early commitment to OECD
has permitted us to play an active role
with the United States and other member
countries in the development of a model
agreement on which the agreement being
signed here today is based. This provides
an alternative route to obtain information
in relation to criminal tax matters and
also provides for a timetable for this
to be extended to include civil tax matters.
“The
development of a network of such agreements
between member states and committed jurisdictions,
whether on a multilateral basis, or a
bilateral basis as adopted by the Isle
of Man, will in due course evidence the
existence of a new and truly international
standard on Exchange of Information.
“The
Isle of Man will continue to support the
development of such international standards
and seek to foster business relationships
with other countries based on those standards
and we look forward to participating in
the ongoing discussions with the United
States to further develop and establish
closer economic and fiscal ties.”
The
IOM's agreement with the US forms part
of the jurisdiction's efforts to implement
its commitments to the OECD, given in
early 2001, which included a commitment
to develop effective exchange of information.
Over the following 12 months the Isle
of Man, together with other jurisdictions,
negotiated a Model Tax Information Exchange
Agreement.
The
Model being adopted provides for exchange
of information based upon a formal request
being received by the Competent Authority
in the Isle of Man. A request must be
made on an individual case basis and the
subject of the request must be under investigation
in the requesting jurisdiction. Other
safeguards are included to prevent ‘fishing
expeditions’ for example, the requesting
party must first take all means available
in its own jurisdiction to obtain the
information. All information that is exchanged
may not be passed on to third parties
and there are strict confidentiality measures.
The
US Treasury Department announced in September,
2006, that the Tax Information Exchange
Agreement had entered into force.
According
to the Treasury: "An exchange of letters
between the United States and the Isle
of Man was completed on June 26, 2006,
thus bringing into force an agreement
that allows for the exchange of information
on tax matters between the United States
and the Isle of Man."
In
February, 2005, agreements were signed
with the Dubai Financial Services Authority,
the UAE Central Bank, and the Bahrain
Monetary Agency.
Dubai
Financial Services Authority (DFSA) signed
two memoranda of understanding with the
Isle of Man's Financial Supervision Commission
and Insurance and Pensions Authority.
The
two agreements aim to provide a framework
for the provision of mutual assistance
and information exchange between the two
jurisdictions with regard to cross-border
transactions. In addition, the agreements
are designed to improve compliance, thereby
helping to prevent money laundering and
fraud.
Under each agreement, the Middle East
Agencies, the FSC and IPA will consult
with each other on an on-going basis to
enhance regulatory co-operation and to
collaborate on international supervision
between the regions.
The
MOUs also provide a framework for regulatory
cooperation through the exchange of information
and mutual cooperation in the field of
on-site examinations of entities, subject
to regulation in both jurisdictions.
In October 2007, an association of Nordic
countries concluded a package of Tax and
Information Exchange Agreements (TIEA)
with the Isle of Man.
