S&P Downgrades IoM Over Regulatory Pressures
by Jason Gorringe, Lowtax.net, London
04 March, 2014
The Isle of Man's credit rating has been downgraded by Standard & Poor's (S&P) over concerns that the island's financial services industry is being weakened by growing tax regulation pressure from international bodies.
S&P cut the Isle of Man's rating from AA+ to AA. The ratings agency said in a statement that, "the downgrade reflects [its] expectation that the contribution of the financial sector to economic growth and exports will gradually decline, due to competitive pressures and tighter regulations that will affect global offshore financial hubs."
Recent initiatives to promote global tax transparency by groups, such as the Global Forum on Transparency and Exchange of Information for Tax Purposes, are threatening to undermine the jurisdiction's attractiveness as a financial center, and, according to S&P, the financial sector's contribution to growth has already declined.
The island's emerging industries, including e-gaming, will not be able to make up for the loss of business in the financial sector on account of tighter regulations, S&P said.
Just three days before the rating downgrade Treasury Minister Eddie Teare announced that the Isle of Man will stop using S&P's rating service.
The Isle of Man's credit rating was last downgraded, from AAA to AA+ by S&P, in 2011.
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