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Isle of Man: Offshore Business Sectors

Introduction

This page was last updated on 24 January 2020.

The UK's three international offshore financial centres, Jersey, Guernsey and the Isle of Man have developed in different ways. The Isle of Man, is not dominated by any one particular activity, but has across-the-board strength in the financial sector, with substantial business in banking, fund management and captive insurance. The island has encouraged manufacturing and trading operations, which can be financially offshore while staying within the EU's VAT regime. Its trust sector is long-established and has a solid backing of law firms, trust managers and advisory practises. The Isle of Man has also established favourable regimes for ship and aircraft management.

In December 2000, the Corporate Service Providers Act 2000 went into force. This creates a licensing regime for corporate service providers (CSPs) and empowers the Isle of Man Financial Supervision Commission (IOMFSC) to process applications for CSP status and investigate CSP license holders. CSPs must operate client accounts like other professionals. Under the act it is an offence for a CSP to operate without a licence.

The island's 2003 budget included a major reform package for the island's fund industry. Key measures included:

  • A zero tax rate for all third party fund administrators, and for managers of EIFs and PIFs - representing an extension of the existing zero rate tax regime on fund managers' profits to both fund administrators and to managers of experienced and professional investor funds
  • VAT exemption for experienced and professional investor funds - representing an extension of the VAT exemption on management fees
  • Overseas funds exemption in the context of Isle of Man regulation - such that an overseas fund may be administered in the Isle of Man without ‘dual regulation’ where it is incorporated in a jurisdiction having an appropriate regulatory framework.

The Isle of Man's fund industry has grown rapidly over the last decade; funds under management or administration grew from GB£6.6bn on 1 December 1999 to almost £60bn on 30 June 2008. By 31 December 2012, this had fallen back to GBP22.3bn. Since then there has been a slight decline in the total amount of managed or administered funds; on 30 September 2019 the total was £17.94bn.

In 2018, a total of 985 new Manx companies were incorporated under the Companies Act 2006, while 762 were formed under the Companies Act 1931.

During 2005, the IOMFSC began a major project to consolidate and modernise the Isle of Man's financial services legislation and put forward important proposals to enhance its accountability and transparency as part of this project. The Commission also set out a mechanism under which there would be involvement of the industry in the setting of regulatory strategy.

This project also embraced innovative proposals for the regulation of e-money, to be drawn up in conjunction with the e-business sector which continues to have strong growth potential.

The Isle of Man's invitation to become a full signatory to the IOSCO multilateral memorandum of understanding will also ensure that Manx-based businesses enjoy access into major markets overseas, the report stated.

Other developments during 2005 included the enactment of legislation for the licensing and supervision of trust service providers. The Commission took steps further to strengthen its own arrangements for good corporate governance. The Financial Services Act 2008, which received royal assent on 1 August 2008, consolidated a number of legislative acts regulating the financial services industry.

 

 

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