The Isle of Man is to introduce a zero per cent corporate tax rate from April 5th, writes Colm Keena, Public Affairs Correspondent
However the 10 per cent tax rate for trading companies that currently exists will continue to apply to profits from banking.
The British crown dependency is also to introduce a £100,000 (€146,418) ceiling on the amount of income tax a resident will pay in any year, irrespective of his or her income.
Treasury minister Allan Bell yesterday announced a budget that included measures aimed at stimulating the flow of investment and business to the island.
He said the zero per cent corporation tax rate was intended to provide a consistent treatment across all sectors as part of the Isle of Man's commitment to a diversified economy. Financial services currently account for 36.5 per cent of the island's economy.
Mr Bell said the move by the Isle of Man put it two years ahead of other British crown dependencies and other competitors in the implementation of a zero-tax strategy. The cap on income tax in any one year is expected to attract high net-worth individuals and active entrepreneurs to the island.
It is also developing a new corporate vehicle, due later this year, to promote the island as a quality business centre. It is designed to make it simple and inexpensive to administer a company while meeting the island's adopted benchmarks of international standards. The concept was developed following a study of company law around the world.
The Isle of Man has been under pressure in recent years from the Organisation for Economic Co-operation and Development (OECD) over the sharing of banking information with revenue authorities.
"The OECD was putting on pressure and there were comments about our tax system so we sat down and thought how could we realise a system that would sustain growth in our economy and address the issues that other countries have raised with us. Your government faces that with your [docklands] and so on," said Malcolm Couch, the assessor of income tax for the Isle of Man, referring to the IFSC.
